South Korea vacillates on crypto ban

Posted: 11 January 2018 12:01 pm

In order for a shutdown to occur, a legislative bill would need to be passed through the National Assembly.

Contrary to recent reports, South Korea has not finalized measures to outlaw cryptocurrency trading. However, the government and other regulator bodies are still debating the legalities of such an action, while continuing to work on a system to prevent the use of anonymous trading accounts and improve financial transparency.

Earlier today, South Korea’s attorney general Park Sang-ki outlined the possibility of a domestic trading ban.

“The South Korean Ministry of Justice is considering the closure of cryptocurrency trading to bring cryptocurrency mania and speculation under control for investor protection,” Park Sang-ki said.

Despite these remarks, Reuters reports South Korea’s presidential office said no ban had been finalized.

“Justice Minister Park’s comments related to shutdown of cryptocurrency exchanges is one of the measures prepared by the Ministry of Justice, but it’s not a measure that has been finalized,” a spokesperson said.

In order for any shutdown to occur, a legislative bill would need to be passed through the National Assembly.

CCN reports the South Korean Ministry of Strategy and Finance is not in harmony with the Ministry of Justice’s proposed cryptocurrency trade ban. Cointelegraph contributor Joseph Young reported via his personal Twitter account that there will be “no trading ban in the short term” and that a final decision has yet to be made.

Late last month CCN revealed four comprehensive cryptocurrency regulatory frameworks that the South Korean government is expected to implement by January 20, 2018. These strategies were designed to help curb volatility and enhance consumer protections. See them below.

  1. Prevent unaccredited investors from dealing with losses through highly volatile cryptocurrencies.
  2. Prevent regulated exchanges from operating as speculative platforms for unaccredited investors.
  3. Ensure underaged investors and foreigners cannot open trading accounts on cryptocurrency exchanges.
  4. Temporarily suspend institutional investors and retail investors from investing in cryptocurrencies.

These were conceived by a cryptocurrency task force, formed by the Ministry of Justice, Ministry of Strategy and Finance, Fair Trade Commission, Financial Services Commission and Financial Supervisory Commission.

Earlier this week, Korea’s Financial Intelligence Unit (KoFIU) and Financial Supervisory Service (FSS) began carrying out joint inspections on six commercial banks offering trading accounts to cryptocurrency exchanges. The investigations will determine whether the institutions comply with South Korea’s anti-money laundering laws and whether they have appropriate measures in place to verify cryptocurrency customers’ identification.

In a statement released Monday, South Korea’s Financial Services Commission said cryptocurrencies were highly likely to be used as a means to launder money due to their potentially anonymous nature.

“Particularly, the so-called ‘virtual accounts’ offered to cryptocurrency exchanges, have been making it more difficult to identify real names of account holders, and leaving cryptocurrency trading more vulnerable to crimes and money laundering. In this context, banks are required to assume a greater responsibility as gate keepers to prevent such illegal activities using cryptocurrencies,” the statement said.

Over the last 24 hours, reports that South Korea may impose a ban on its lucrative cryptocurrency market pushed the price of bitcoin down about 5% to US$13,700, while other digital currencies also suffered losses.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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