Controversy over Legalization
A lot of attention is being to the National Assembly’s pushing for the legislation of virtual money, financial authorities have shown a lukewarm attitude on regulations and legalization of virtual money such as Bitcoin. Even though the ruling party pointed out that financial authorities did not care about transactions of virtual currency worth seven trillion won (US$6.3 billion) without any regulations related to Bitcoin, but the financial authorities are still cautious about the legislation of virtual currencies.
In addition, on July 3, Park Yong-jin, a lawmaker of the ruling Minjoo Party announced that he will propose a bill to revise the legislation of virtual currencies which will require people to receive the approval of virtual currency-related sales activities such as virtual currency-based transactions from the Financial Supervisory Commission and impose capital gains tax on virtual currency transfers.
First of all, the bill will bring the Financial E-Trade Act a clause that those who conduct sales activities such as sale, purchase, brokerage, issuance, storage, and management related to virtual currencies, or those who intend to trade virtual currencies in sales activities in Korea should receive a permit from the Financial Supervisory Commission. To receive the permit, they must have capital of over 500 million won (US$450,000), be able to protect its users, and have sufficient professional personnel and computer equipment.
The bill bans door-to-door sales of virtual currency, sales of virtual currency via telemarketing, multilevel marketing for virtual currency, the brokerage and good offices of virtual currency and punishes those who conduct sales activities related to virtual money without a permit.
The bill makes it mandatory to submit details of the issuance, sales, brokerage management and exchanges of virtual currencies and virtual currency-based payment statements in the Income Tax Act and the Corporate Income Tax Act.
"Currently, domestic virtual money traders Bithumb, Korbit, CoinOne, and Coinplug were established without any license from financial authorities. They receive about 6.5 billion won (US$5.8 million) a day by 0.5% of transaction money as a commission,” lawmaker Park said. "However, no legal regulation in Korea has led to no definition of virtual currency and furthermore, made virtual currency-related activities as a whole illegal. Korea must make discussions in terms of law and systems."
However, the Financial Supervisory Commission has been prudent about the ruling party's move toward legislation. "This bill will not be legislated at the request of the government," said an official of the Financial Supervisory Commission. "I heard that a bill related to virtual money will come out, but I do not know specifics yet. Thus, I am in a situation to check the bill in cooperation with lawmaker Park’s office.”
"Currently, a relevant task force team is studying overseas cases to determine whether or not regulations are needed. Nothing has been decided about the legislation of a bill about virtual currency," he said.
The Financial Supervisory Commission claimed that most countries had no particular regulations on virtual currency except for Japan which revised an act on the registration of virtual currency traders and compliance with anti-money laundering law.
But Park argued that New York State in the United States is regulating virtual money business activities except for those of authorized dealers, China has also banned withdrawals of investment in Bitcoin and Russia and Indonesia banned the use of virtual currency.