South Korea is set to become the second country in the world to introduce national regulation on digital currencies, after Japan.
According to a report of the English-language version of The Korea Herald, the MP Park Yong-jin of the ruling Democratic party of Korea, is drafting a set of bills to set up the regulatory framework for the transactions with cryptocurrencies in the country. They are expected to be tabled for consideration in July.
The amendments to the Electronic Financial Transactions Act provide that traders, brokers, or other business entities involved in cryptocurrency transactions would be required to get regulatory approval from Korea’s Financial Services Commission. There is also a capital requirement of at least 500 million won ($436,300) and data processing facilities.
The draft amendments also revise the income and corporate tax to allow financial authorities to tackle tax evasion from digital currency transactions.
“User protection, tax evasion and money laundering have long been issues in terms of digital currency transaction,” Kim told The Korea Herald. “Digital currency traders have often found themselves in trouble, because they are out of a legal boundary.”
The Korea Herald quotes data of the Coinass market data trackers, showing that in the past two years in Korea was traded bitcoin worth 1.92 trillion won. According to data from the same source, the number of bitcoin transactions rose 17.1% in 2016, over the year.
There are several digital currency trading platforms in Korea – Bithumb, Korbit and Coinone – and currently they lack legal grounds for their existence. There are also several foreign cryptocurrency exchanges, like Gemini, who also operate in the country.
According to data of Cryptocompare, South Korea’s won had the fourth-largest bitcoin exchange trading volume from April 1 to June 10.