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South Korean lawmakers have drafted crypto legislation for the National Assembly to consider as part of the government’s late response to the industry’s call for regulatory clarity.
This is the first time that specific cryptography legislation has been discussed in the country’s parliament.
On May 7, Democratic Party lawmaker Lee Yong-woo submitted a bill called the Virtual Assets Act to the National Assembly. Ten days later, Kim Byung-wook, another Democratic Party lawmaker, introduced his own bill, the Act to Promote Virtual Asset Industry and Protect Investors.
We need to establish legal mechanisms to both promote the domestic crypto industry and protect investors. Otherwise, South Korea will fall behind the rest of the world, Kim said.
The Korean government does not currently recognize bitcoin or other cryptocurrencies as financial assets. However, the government has announced that it will start collecting taxes on crypto revenues from 2022.
Han Suh-hee, a lawyer who advises crypto companies on navigating legal frameworks, called the position contradictory.
The government is asking traders to pay taxes without offering them any legal protection, she told a panel discussion on South Korea’s regulatory environment, which was broadcast as part of the event. CoinDesks Consensus 2021 on May 25.
Speaking at the same event, CEO Sirgoo Lee of Dunamu, the company that operates Upbit, said a lack of regulatory clarity is hurting the industry. He said that a bland government stance only confused businesses and traders, which ultimately held back the growth of the industry.
The government needs to take a clear stance on what exchanges can and cannot do, Lee said.
Eun Sung-soo, head of the Financial Services Commission (FSC), the country’s main financial regulator, sounded the alarm on April 22 when he said all crypto exchanges in the country could potentially be shut down. He also said that it is not the FSC’s responsibility to protect crypto traders and investors from scams, fraud or market manipulation. He said it was the personal responsibility of investors to protect themselves and called crypto an inherently speculative asset.
A month after his somewhat inflammatory words, Eun seems to have reconsidered his position. Speaking at the Korea Fintech Week 2021 event on May 26, Eun appeared to offer an olive branch to crypto traders, saying traders will most likely be protected as long as they trade on exchanges registered with authorities. financials by September.
Eun added, however, that it is not the job of governments to protect traders from crypto volatility.
The FSC may have taken a more dovish stance on crypto, but there are still plenty of people calling for crypto-specific legislation. Current regulations simply apply the traditional anti-money laundering (AML) and know-your-your-customer (KYC) protocols of traditional financial sectors to exchanges.
On May 26, the Korea Blockchain Association announced that it had formed a task force of industry experts and legal advisers whose specific mission is to brief the government on sound crypto legislation.
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