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By Kim Yoo-chul
Financial regulators plan to ease rules on crypto-based assets in line with policies initiated by G20 nations to establish "unified regulations."
The Financial Services Commission (FSC), which oversees policies and directs the Financial Supervisory Service (FSS), has revised its guidelines relating to "all activities" of Korea's leading cryptocurrency exchange operators.
"The FSC made revisions to its rules to apply strengthened policies in order to prevent or detect money laundering and illegal activities because the regulator isn't opposed to cryptocurrencies," an official said.
"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," another official said.
They said the FSC and FSS will not change the government's stance on crypto or digital assets as it's difficult to value them as "financial assets." The administration earlier classified cryptocurrencies as "non-financial products" due to their speculative nature.
Cryptocurrencies are a global phenomenon; but a concern is "limited regulation" which allows market manipulation that in turn introduces volatility. This discourages institutional investment, since a large fund has no assurance that its capital is "truly secure" or at least "protected."
"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," said a trade ministry official.
Financial policymakers of the G20 set a July deadline for the first step toward "unified regulations" of cryptocurrencies because they see them as "too small to jeopardize" financial markets.
The National Assembly proposed a plan to legalize domestic initial coin offerings (ICOs), which the regulators have banned. Rep. Hong Eui-rak of the ruling Democratic Party said lawmakers are "working on" a bill to lift the ban.
The trade official said the Ministry of Strategy and Finance is in talks with the National Tax Agency to develop a taxation framework for cryptocurrencies, the process of which has been delayed from an original June deadline.
"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," said Kim Byeong-yong, a technology journalist based in Seoul.
