Control on Establishment
A plan to register or permit virtual money dealers such as exchanges is in the works.
"The regulation of business using virtual money is desirable rather than the regulation of virtual money itself,” said professor Jeong Sun-seop of Law School at Seoul National University in a legislative public hearing for the protection of users of virtual currencies held at the National Assembly in Yeouido, Seoul on July 18. In the short term, we should regulate virtual currencies used for illegal purposes. It is necessary to establish a general regulation on payments in the long run by analyzing the benefits and costs of regulations. "
Accordingly, Park Yong-jin, a lawmaker of the ruling Minjoo Party, is planning to propose an amendment to the Financial Transactions Act, including the regulation on permission of a virtual currency exchange within this month. The day's hearing was held by lawmaker Park, a member of the National Assembly's National Policy Committee. Participants stressed that systems were needed to regulate virtual currency transactions as virtual currency transactions were soaring and damages to consumers were on the rise.
"The KOSDAQ market trades 5 trillion won (US$4.5 billion) a day while daily virtual currency trade stands at one trillion won (US$900 million). No regulation for consumer protection in the virtual money market gives rise to problems," said Kim Jin-hwa, director of Korbit, emphasizing a need to regulate exchanges.
"It may be important to register a virtual money dealing company. But there is a problem that the virtual currency market has small transaction volume, so the market is vulnerable to market price adjustments and undisclosed information,” pointed out Kim Yeon-joon, director of e-finance at the Financial Services Commission. “I mean that we need to carefully review a registration system for exchanges as the effects of the protection of consumers and investors are not sufficient with the introduction of regulations targeting dealers only without regulations on market price adjustment. No country in the world regulates or attempts to regulate market price adjustment."
"Basically, the nature of virtual money trade seems to be similar to that of speculation in tulips in the Netherlands," said Lee Jong-keun, a chief public prosecutor of the Suwon District Prosecutors’ Office. “Companies that caused damage to consumers such as hacking should be banned from brokering."