The World watches how South Korea plays out
Recent news out of South Korea about the status of their cryptocurrency exchanges has sent shockwaves across the virtual currency world. Police raided leading digital currency exchanges Bithumb and Coinone last week due to an investigation into purported tax evasion.
Local media in the county recently reported about an alleged bill that would see exchanges in the country be completely shut down, which was seen as a big change from a December announcement about how the government was merely looking to improve security within exchanges.
The announcement came at a time where many in the South Korean government were taking a hard and skeptical stance against virtual currency. Policymakers in recent weeks expressed worry that the cryptocurrency crazy sweeping across the country was introducing citizens to crime and the frenzy of speculation. The Bank of Korea’s Governor Lee Ju-yeol made headlines by mentioning how virtual currency was not legal and also was not being used properly.
News of the legislation drew a swift backlash across South Korean society and within the government. As it spread across the cryptocurrency world, many markets for some of the leading coins plunged into turmoil while thousands of citizens started to sign petitions asking the South Korean president to halt progress of the legislation.
Opposition parties in the government characterized the entire bill as an unfair and illegal crackdown since it was being ushered through the government without any sort of discussion. They said any legislation of this magnitude should be introduced in a way that gives all sides plenty of time to discuss and debate about it. Debate about the fate of cryptocurrency has lead to deep divisions among politicians in the country.
The Presidential office quelled some fears after releasing a follow-up statement about how the move was still not “finalized,” and a lawmaker in the country said that a final decision could come this week about the government’s thoughts on cryptocurrency exchanges.
However, the chairman of the South Korean Fair Trade Commission (KFTC) said on Wednesday that they actually do not have any authority to close digital currency exchanges, even though they are currently investigating 13 of them across the nation.
Chairman Kim Sang-Joo said in an interview how the e-commerce law these exchanges allegedly violated does not give regulators the proper authority to close them. He also said the other laws in place are not clear enough to where they could be applied to close exchanges, seemingly putting to rest questions about if another agency could use their power to close an exchange. Kim also countered a previous claim by the nation’s Justice Minister that investment in digital currency was a form of gambling.
Despite his statements in the interview, Kim maintained that the ongoing investigation into the exchanges has led to a number of illegal activities being uncovered. He pledged that reforms would be rolled out in the first half of the year, and asserted that regulators would ask lawmakers to write and pass specific amendments in the latter half of the year if they still felt like illicit activity was still taking place.
Right now, South Korea’s Financial Services Commission is just thinking about what they can do in the current framework of the law, and is considering ways to either shut down all digital currency exchanges, or just close ones that have blatantly committed crimes.
Amid all the discussion about cryptocurrency exchanges in the country, authorities are also taking a long look at the general merits and drawbacks of virtual currency on the economy. Governor Lee of the Bank of Korea said yesterday how the nation’s Central Bank had joined research at the Bank of International Settlements into the long-term effects of cryptocurrencies. He said the Central Bank decided to participate in the research since there is a potential that central banks could one day start rolling out virtual