South Korea Soon Will Legalize Bitcoin and Ethereum
(Protect Traders From Bubble Burst)
On July 3, Park Yong-Jin of the Democratic Party of South Korea announced that revisions on the regulatory frameworks for cryptocurrencies would be released in the upcoming months.
Three bills will be drafted and revised by Park with the focus on legalizing Bitcoin and Ethereum.
In the proposal obtained by local publications, Park emphasized the necessity to protect South Korean traders and investors from potential risks.
First step will be revision of Electronic Financial Transactions Act
One of the first steps Park will take in the process of legalizing is to revise the Electronic Financial Transactions Act, which will allow businesses involving cryptocurrencies such as trading platforms and exchanges to retain capital of at least $450,000.
Such requirement will not be an issue for most South Korean Bitcoin and cryptocurrency exchanges as they are backed up by some of the country's billion dollar corporations and GV capital firms.
Korbit, the second largest digital currency trading platform in South Korea is backed by the country??ôs largest telecommunications company SKT and SoftBank Ventures Korea.
Bithumb, the largest Bitcoin trading platform in South Korea, is operated by a public company - BTC Korea and is currently looking to raise capital through a paid-in capital increase in the coutry's stock exchange. During its peak, Bithumb processed more than $750,000,000 worth of Bitcoin, Ethereum, Litecoin, Ethereum Classic, Dash and Ripple, solidifying its position as the largest trading platform in the country.
No legal grounds so far
At the moment, Bithumb, Korbit and Coinone, the three largest digital currency trading platforms in South Korea that control nearly 100% of the South Korean Bitcoin exchange market, have no legal ground according to Park.
Therefore, the three exchanges along with other large trading platforms in South Korea will have to be licensed and regulated by the South Korean Financial Supervisory Service, which will require the retention of capital of at least $436,000.
Some platforms are widely known for their strict verification process to avoid potential conflict with South Korean regulations.
In an interview with The Korean Herald, attorney Kim Kyung-hwan explained that the regulation and legalization of Bitcoin and other virtual currencies would ensure that both traders and businesses will operate within the legal boundary without running into conflict with existing financial regulations.
User protection, tax evasion and money laundering have long been issues in terms of digital currency transaction. Digital currency traders have often found themselves in trouble because they are out of a legal boundary.