Regulating Bitcoin Trading: Financial Authorities to Strengthen Regulations on Digital Currency Trading | BusinessKorea

Monday, November 20, 2017

Korea’s financial regulators will strengthen regulations on the trade of digital currencies to protect consumers.
Korea’s financial regulators will strengthen regulations on the trade of digital currencies to protect consumers.
SEOUL,KOREA
4 September 2017 - 10:30am
Yoon Yung Sil

As there are signs of digital currency speculation, including Bitcoin, the financial regulators will strengthen regulations on the trade of digital currencies to protect consumers.

The Financial Supervisory Commission (FSC) announced on September 3 that it held a joint task force meeting with digital currency-related institutions and regulators, such as the Korea Fair Trade Commission (KFTC) and the National Tax Service (NTS), on the 1st to promote the viable measures within the current legal boundaries and come up with the measures that narrow blind areas.

Accordingly, the financial authorities plan to strengthen the user authentication procedures and banks’ suspicious transaction report systems when trading digital currencies in order to secure transparency of trading and protect customers. Also, they will tighten the monitoring on petty overseas remittance service providers who use digital currencies as means to transfer money abroad in cooperation with related agencies. In addition, the financial regulators plan to introduce regulations on domestic trading of digital currencies, including the revision of Act on Reporting and Use of Certain Financial Transaction Information considering the trend of major countries strengthening the anti-money laundering law.

They will also recommend agents in digital currency exchanges include consumer protection measures, such as deposits for consumer assets, in their voluntary restrictions.

The financial authorities will also improve laws and systems. An official from the FSC said, “We will clearly state the foundations of the Act on the Regulation of Conducting Fund-Raising Business Without Permission for illegal fund-raising impersonating digital currency investment and strengthen levels of punishment. We will expand the application range of Act on the Regulation of Conducting Fund-Raising Business Without Permission and come up with regulations on digital currency trading by establishing the law.”

They will punish initial coin offering (ICO) that raises funds in the form of stock issuance using digital currencies permitted in some countries, including Switzerland, for violating the capital market act. Kim Yong-beom, the secretary-general of the FSC who chaired the task force meeting, said, “At this point, digital currencies cannot be considered money and currency not financial products.”

In addition, they will thoroughly examine customer information leakages caused by hacking and take severe disciplinary action for violations. They are also planning to examine the current conditions of digital currency traders and establish joint inspection systems with the KFTC, prosecution, police and NTS.

An official from the KFTC said, “For issues that haven’t formed the international consensus such as the character of digital currency traders, permission and taxation, we will come up with counterplans by thoroughly analyzing the discussion and regulation trends of other countries and international organizations and fully discussing them.” 

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