This positive statement is likely to generate a corresponding reaction in the crypto market.
South Korea is softening its firm cryptocurrency regulations, thanks to agreements made during the last G20 summit that gave a July deadline for beginning steps towards a Unified Blockchain Policy. The ICO ban placed by the Financial Services Commission (FSC) in September 2017 could soon be lifted.
The country which banned ICOs last year has been busy revising and updating cryptocurrency regulations. Last week The Korea Times reported that FSC, the country’s financial regulator had revised its guidelines regarding the activities of cryptocurrency exchanges. The publication quoted an official saying:
Financial regulators plan to ease rules on crypto-based assets in line with policies initiated by G20 nations to establish unified regulations
However, the official emphasized that there were no major reversals in policy or how the government classifies cryptocurrencies (The administration has classified cryptos as non-financial products owing to their speculative nature) for regulatory purposes. The FSC governs and inspects the Blockchain policy while the FSS studies and supervises financial institutions under FSC’s oversight. FSC says the new guidelines will affect all crypto exchanges. The FSC official maintained that:
The FSC made revisions to its rules to apply strengthened policies to prevent or detect money laundering and illegal activities because the regulator isn’t opposed to cryptocurrencies.
In May, the new director of the Financial Supervisory Service (FSS), Yoon Suk-Heun indicated he would revisit cryptocurrency regulations saying that FSS will cooperate with FSC. The Korean National Assembly mooted a plan to allow previously banned local ICOs while the Democratic Party says its legislators are drafting a bill to remove the ban. In the meantime, the Ministry of Strategy and Finance is discussing plans to tax cryptos.
The move comes when civilians, expert groups, and Blockchain industry advocates are piling pressure on the government to reconsider its restrictive cryptocurrency regulations. In April, Prof. Lee Min-Hwa, Chairman of the Korea Creative Economy Research Network said about the regulations that:
The government is not looking at the full picture with its Industry 4.0 policies. A social consensus is forming with regards to the Blockchain technology. If South Korea does not want to miss growth opportunities, the government needs to be proactive with its policy-making
The G20 believes the July deadline reasonable as the use of cryptocurrencies doesn’t threaten the traditional financial markets. While in the past negative government announcements and actions affected the crypto markets adversely but this positive statement is likely to generate a corresponding similar positive reaction.
There is now political goodwill to make Korea a crypto-friendly nation. The country has a huge population of crypto enthusiasts even though the government is still doubtful of digital currencies. The country now recognizes crypto exchanges as financial institutions and has agreed to categorize them “cryptocurrency exchange and brokerages,” meaning they can transact business with local government support.