South Korea, a country that’s in the forefront of cryptocurrency adoption, is set to loosen cryptocurrency-related rules, in line with the G20’s goal of establishing “unified regulations” that will reportedly help regulate cryptocurrencies without hindering innovation.
According to The Korea Times, the country’s Financial Services Commission (FSC), an organization that oversees policies and directs the Financial Supervisory Services (FSS), has reviewed guidelines on “all activities” in which Korea’s cryptocurrency exchanges are involved in.
Citing an official from the organization, the news outlet revealed the FSC may “apply strengthened policies” to prevent money laundering and other illicit activities with cryptocurrencies, but revised its rules because “the regulator isn’t opposed to cryptocurrencies.”
Since cryptocurrencies are a global phenomenon, regulators believe a lack of oversight will see whales manipulate the markets, and in turn increase volatility. Another official added:
Establishing unified rules is a complicated issue given the broader range of assessments between government agencies. This is why the country needs close international cooperation as it is still in the early stages of fine tuning guidelines.
Increased volatility discourages institutional investments as large funds need to know their capital is “protected,” the Korean Times notes, implying regulations could help increase cryptocurrency adoption in the country.
The officials noted that the government won’t change its stance on cryptocurrencies, and will keep considering them “non-financial products” because of their speculative nature, which makes it hard to see them as “financial assets.” A trade ministry official was quoted as saying:
Any major reversal in policies is unlikely, but the government seems to believe a gradual shift in attitude toward crypto-based assets is needed. What regulators should do is figure out how to regulate them properly and prudently as Korea needs to put more emphasis on blockchain technology after obtaining knowhow and understanding of the possible flipside of cryptocurrency trading.
The FSC’s move is being made now as July was the deadline financial lawmakers at G20 set for regulators to take steps towards “unified regulations,” as crypocurrencies were then seen as too small to take a toll on traditional financial markets.
ICO Ban May Be Lifted
According to officials, South Korea’s National Assembly proposed a plan to legalized initial coin offerings (ICOs) in the country, which are currently banned. Per Rep. Hong Eui-rak, lawmakers are currently working on lifting the ban.
The country’s Ministry of Strategy and Finance is said to be in talks with the National Tax Agency, in an attempt to develop a taxation framework that can be applied to cryptocurrencies. Kim Byeong-yong, a local tech journalist, stated:
Global banks predict that interest in cryptocurrencies will double. We believe an increase in adoption will come when crypto-assets can be used as actual currencies rather than just speculative investments.
As CryptoGlobe covered, South Korea’s National Assembly proposed lifting the ban on ICOs back in May, in a move that would see projects who were looking to sell their tokens adhere to relevant investor protection provisions.