South Korea: Suggested Readings

To learn more about South Korea’s laws we recommend the following readings:

  • The South Korean financial regulator Financial Supervisory Service (FSS) has claimed that it has no plans at present to regulate the trading of digital currencies. The watchdog based its decision on the fact that it does not consider digital currencies to be a substitute for money, as they are not legal tender in the country. During a press conference on the issue, FSS Governor Choe Heung-sik claimed that the only role the regulator should play in the digital currency space is warning the public about potential risks: “All we can do is to warn people, as we don’t see virtual currencies as actual types of currency, meaning that we cannot step up regulation for now.” He also added that the introduction of any cryptocurrency regulation in the country will only promote digital currency trading, as investors will think that the watchdog already recognizes cryptocurrency as “actual” currency.

  • Apart from a number of rules that were already issued, the National Tax Service (NTS) is currently drafting a framework on how to effectively collect taxes on cryptocurrency trading transactions. The NTS will most likely introduce capital gains taxes on companies and individuals who trade digital currencies. Currently, trading virtual currencies in the country incurs only commission fees. The chief of the country’s National Tax Agency, Han Seung-hee, told lawmakers that the group is mulling imposing a value-added tax, a capital gains tax, or both on trades, with the help of financial authorities. An official decision is expected within the first quarter of 2018. If the plan gets implemented, South Korea will become one of the few countries to tax cryptocurrency-cash exchanges.

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  • By the end of 2017 the South Korean government is expected to roll out a few regulatory frameworks focused on investor protection and taxation. One of the policies currently being discussed is the possibility of equally distributing the daily trading volumes of cryptocurrency exchanges across the market and implementing stricter Know Your Customer (KYC) and Anti-Money Laundering (AML) policies. The Korea Blockchain Industry Association announced that it will be taking measures to promote increased transparency in the country’s cryptocurrency industry. In an agreement reached by 14 exchanges including major virtual exchange Bitthumb, the association said that users will only be permitted to trade through one account only after their identity is confirmed by traditional financial institutions such as banks. The measures are not mandatory, but will be imposed starting January 1, 2018.
    In essence, the service will enable customers to use the share their blockchain-based certificates and data across all participating financial institutions of the Kofia consortium without the need for a verifying central authority like the Korea Information Certificate Authority (KICA). Chain ID will see its launch in November via Android and iOS apps ahead of a rollout of desktop versions. The Korea Financial Investment Association has laid claim to the world’s first commercial blockchain used by financial firms for customer security. Industry body Korea Financial Investment Association (Kofia) has announced the implementation of Chain ID, a blockchain identification platform that will see a number of securities firms and merchant banks securely share customer information for online identification. Developed by Seoul-based blockchain startup theloop, Chain ID is merely the beginning for what will ultimately be a sweeping adoption of blockchain systems among society, according to the company’s CEO Jonghyup Kim:“Chain ID goes beyond merely replacing Korea’s outdated banking certificates. It puts blockchain into the pocket of every Korean, setting the stage for widespread use of blockchain-based transactions in a new blockchain-powered financial ecosystem. Blockchain is the future.”

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