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South Korea to Change Its Regulatory Approach to Cryptos

south korea

One of the countries that greatly affected cryptocurrency price in 2018 is South Korea. In fact, their regulatory changes have affected crypto price mainly because of the number of crypto investors in the country. Cryptocurrencies are even sold at “kimchi premium” price considering the popularity of digital currencies.

However, recent development in South Korea is good news for the entire crypto market. You can thank the G20 economic leaders for this. It has been seen by the economic leaders of the G20 nations that cryptocurrencies are considered “financial assets”. And therefore, the previous classification of South Korean regulators should be reversed.

South Korean regulators have previously called cryptocurrencies as “non-financial assets” considering the highly speculative characteristic of digital currencies. However, it is becoming apparent that South Korea is now making a much friendlier stance compared to cryptos. In fact, financial watchdog promised already promised to “improve things” regarding their regulatory stance.

The Financial Supervisory Service (FSS), Korea’s financial watchdog, decided to acknowledge what G20 nations think of cryptocurrencies. The agency mentioned that “It’s almost certain that cryptocurrencies will be classified as assets and the main issue will be centered on how to regulate them properly under the unified frame that will be agreed upon between G20 nations. Given the current stance in Korea, this isn’t good, but we will step up efforts to improve things”.

Yoo Suk-heun, the new governor of FSS, mentioned in an internal study on cryptos that there are “positive aspects” that could lead to a more relaxed regulation in the near future.  The FSS is the same authority that ordered a ban on ICOs in September 2017.

With these improved developments in the crypto market, regulators will take around a few weeks before they can come up with bills that can finally legalize the launch of new cryptocurrencies as well as ICOs in the country.

Actions Against Upbit

Despite the relaxed rules, there was a raid on South Korea’s largest cryptocurrency exchange recently. South Korea’s largest crypto exchange, Upbit was suspected of fraud. It was a joint action of both Korean Financial Intelligence Unit, Financial Services Commission, and Seoul Police.

Among allegations include leakage of money via US trading websites, money laundering, and suspicion of insider trading. However, Lee Seok-woo, the president of Upbit’s parent company Dunamu mentioned that they dismiss these allegations. “In early March, when Upbit was suspected of only book transactions without coins.. I have been notified that the amount of coins is 100{4ede17fdd9b4ce8121d01fc4b54913fe84f8215aace504cc657695cefb5329ff} identical to the number of coins “in the wallets” according to Lee Seok-woo.

According to the exchange, they make use of a separate wallet in keeping and storing digital currencies apart from both deposit and withdrawal wallets. They also mentioned that digital currencies that don’t have depository wallets are kept there.

Upbit calls the entire situation rather a misunderstanding. They mentioned that the suspicions are unfounded.

Despite the relaxed laws, authorities are still keeping an eye on crypto businesses considering the number of scams that have revolved surrounding the crypto market. With the recent development, to what extent can this affect the market?

Janneke Eriksen

Janneke is a writing ninja and has vast experience in journalism, specifically in the crypto space. As a blockchain believer and avid Bitcoin fan, she’s incredibly excited to share to our readers the latest news around so they are always updated wherever they are.