South Korea Progressing on Road to Cryptocurrency Regulation

South Korean authorities and established firms continue to grapple with cryptocurrency.

Exchanges to share data with banks

The government of South Korea is making moves to require cryptocurrency exchanges to share user data with banks.

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According to the Korea Herald, the system is likely to be introduced by banks in the country “late this month or early next month”. Currently, banks are not allowed to open virtual accounts, and anonymous accounts at exchanges are banned. Banks are also required to check if cryptocurrency exchanges are compliant.

A government official told media that the new system is geared towards tax compliance – by accessing transaction data, the government will be able to tax the activities of exchange users.

Credit cards block foreign exchanges

This news comes as South Korean credit card firms have begun blocking payments to overseas cryptocurrency exchanges located overseas, according to Business Korea.

The companies involved are Woori Card, Lotte Card and Shinhan Card. Shinhan Card is the largest credit card company in South Korea. Kookmin Card, another major firm, will also begin blocking this week.

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As of now, 20 major exchanges are blocked, according to a statement from the Credit Finance Association of South Korea. “An increasing number of exchanges will be continuously blocked in the future. There are about 7000 cryptocurrency exchanges around the world,” it said.

The move is not likely to be a popular one – according to the report, Shinhan Bank was boycotted by customers “when the bank tentatively postponed the introduction of the real-name cryptocurrency transaction system”.

“Relevant government offices need to present a unified stance”

Meanwhile, according to the Korea Times, the Financial Consumer Agency has said that halting digital coins would actually be illegal. The FCA is a branch of the Financial Supervisory Service, created in July 2017. The Financial Supervisory Service is itself a branch of the Financial Supervisory Commission, which is the country’s financial regulator.

The article points out divisions in the government – the finance ministry fears stifling innovation, while the ministry of justice wants to shut down exchanges entirely. “The government has yet to establish the legal grounds over related laws for consumer protection, in particular in the cryptocurrency market,” said an FCA statement.

The FCA called on Choi Jong-ku, head of the FSC, to resign, according to the report: “Financial Supervisory Commission Chairman Choi Jong-ku showed his inability to take on the issue. Relevant government offices need to present a unified stance and clear message to the market along with measures over how to enable the digital currencies to transform the finance industry.”

The statement went on to say that the belief that cryptocurrency is threatening the existing financial system is “irrational”, and that it is “conceivable” that cryptocurrency investors could sue if a ban on exchanges cost them money.

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