A senior official from Korea’s Financial Services Commission has vowed to regulate the local bitcoin space while hinting at putting an end to the blanket ICO ban.
FSC vice-chairman Kim Yong-beom has confirmed the financial regulator’s plans to regulate bitcoin and cryptocurrencies, claiming the measures are necessary to “curtail money laundering and tax dodging.”
The official was speaking at a public hearing at the National Assembly today to discuss a bill calling for a legal framework on cryptocurrencies, according to the Korea Herald.
He revealed the authority is “closely watching” developments in cryptocurrency trading markets before adding FSC, “if needed” would “enforce more stringent measures,” than it already has. The FSC’s Financial Supervisory Service (FSS) followed China’s cue in enforcing a complete ban on initial coin offerings toward the end of September this year. The ban could be reversed, the official added -more on this further below.
Notably, he added:
The government doesn’t consider cryptocurrencies as money or financial products. We will regulate bitcoins to curtail money laundering and tax dodging.
He also deemed bitcoin “a bit of a Ponzi scheme”, claiming that investors believe they can resell their bitcoin at a higher price at a later time. The view is shared by Korea’s Justice Minister Park Sang-ki, who is heading a new task force launched by the government this week to propose a framework for cryptocurrency transactions. The ministry has also dismissed cryptocurrencies by claiming they will not become “the new gold or money in the future”. Instead, the lack of government or institutional backing, the ministry says, has relegated cryptocurrencies to ‘merely become a source of speculation.’
“Due to heated speculation in cryptocurrencies, concerns about their use in crimes has increased that could possibly harm citizens,” Justice Minister Park Sang-ki reportedly said. “The TF will review regulatory measures on cryptocurrency trade to prevent any possible crimes.”
ICOs – Professional Investors Only?
“ICO will be prohibited in all forms,” Kim Yong-beom said in late September upon announcing a ban on ICOs. Now, the official has revealed that the authority could backtrack from a complete ban, if only to allow professional investors take take part whilst keeping retail everyday investors from participating in startups’ and companies’ financing through cryptocurrencies.
Kim Yong-beom said:
Bitcoin is complicated in its technology and investment method. So considering its risk and technology expertise, it is right for professional investors to do an ICO, not regular citizens who are not informed of its technology and complicity.
Korea is in the process of mandating regulations for bitcoin exchanges presently, requiring trading platforms to follow a number of consumer protection standards and KYC norms to function in the country.