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South Korea passes Crypto Law providing much needed framework

South Korea passes Crypto Law providing much needed framework
By We Play Coins
Added on Mar 08, 2020

South Korea passes crypto law in a landmark ruling that helps implement cryptocurrencies across the board. The law provides a regulatory framework that enables exchanges and other firms to effectively and legally implement crypto currency technology. The news was covered by the Dailyhodl.

The South Korean National Assembly unanimously voted in favor of a bill on Thursday that provides the regulatory framework for cryptocurrencies, exchanges and crypto-related platforms. The approval of the amended Special Financial Transactions Information Act signifies the legalization of cryptocurrency trading and holding in the country. It marks one of the world’s most comprehensive legal frameworks for the emerging industry.

The legislation gives Korea’s financial regulators the authority to govern innovative cryptocurrency platforms while developing controls to prevent money laundering.

Simon Kim, chief executive of blockchain incubator Hashed, tells Cryptonews,

“There has been great uncertainty regarding regulations in cryptocurrency in South Korea until now. However, with the new law, cryptocurrency has been officially classified as an asset class by the institutions and virtual asset operators are able to operate under proper law in Korea.

I believe this is a strong, positive signal for South Korea moving forward and proving itself as the perfect testbed for blockchain and cryptocurrency on the global scene.”

The bill is a big boost to the crypto industry that has struggled to attract more mainstream users, enterprises and institutional investors due to a lack of regulatory clarity.

News Asia reports that “cryptocurrency is now fully legal in South Korea” and that there will be a six-month grace period, granting startups, exchanges and other entities affected by the law until September of 2021 to become fully compliant.

The law also requires crypto exchanges, wallet companies, trusts and initial coin offerings to comply with the real-name verification system. The measure curbs money laundering by linking crypto-related businesses to accounts at approved Korean banks. Large Korean exchanges such as Bithumb, Korbit, Upbit and Coinone are already using the system to withdraw and deposit fiat currency.

Exchanges will also need to obtain an information security management system (ISMS) certification from the Korea Internet Security Agency (KISA) within the six-month grace period or risk being shuttered, as well as comply with reporting requirements established by the Financial Action Task Force (FATF).

The bill is expected to come into effect by September of 2021.

The law comes on the heels of the Indian Supreme Court ruling against a Central bank directive to banks to cease services to crypto firms. The recent revoking of the RBI circular has seen an upsurge in crypto activity in the subcontinent. However, the ruling is only a battle in a much longer war. There is still a bill to ban cryptocurrencies in draft lying on the governments’ desk. It recommends a 10 year jail term for anyone who possesses cryptocurrencies. The Supreme Court ruling was simply a reaffirming of the right to bank by any firm regardless of the type of work. However, if the ban comes into effect in the future, the Supreme Court ruling with not hold water.