Cryptocurrency is finally legal.
On March 5, according to South Korean media, the plenary session of the Korean parliament has passed the amendment to the special financial law, which will be implemented in one year (i.e. March 2021).
It is understood that the content of the special financial law includes the cryptocurrency exchange license system, and the real name registration of cryptocurrency exchange accounts supported by banks. This also means that virtual assets have not only been formally legalized in South Korea, but also cryptocurrency exchanges will be officially regarded as financial institutions. (previously, the Korean cryptocurrency exchange was classified as an information provider rather than a financial institution)
Amendments to the special finance law
It is understood that the amendment complies with some of the implementation standards recommended by FATF and the FIU virtual currency anti money laundering guidelines formulated by the financial intelligence unit (FIU) of the Korean Financial Services Commission.
At the same time, the FIU will continue to formulate a series of measures such as subordinate regulations to implement the amendment smoothly. Relevant departments will also actively collect opinions from the encryption industry and private experts.
The amendment stipulates that the operator of virtual assets must undertake the obligation of preventing money laundering, and stipulates the matters that financial companies must abide by when they conduct financial transactions with virtual asset operators.
The main authorized items of the bill include: the scope of anti money laundering obligations and virtual asset operators; the scope of virtual assets applicable to the law; the encryption related enterprises must register with the financial intelligence unit (FIU) of the Financial Services Commission (FSC) and report to the relevant departments; the deposit and withdrawal account that financial companies can confirm the real name of virtual asset operators Households. (starting criteria, conditions and procedures)
Virtual asset managers not only have the basic anti money laundering obligations and the obligation to report to the FIU, but also have additional obligations such as classification by users and transaction details. Moreover, the operator of virtual assets also needs to set up acceptance conditions, such as issuing the deposit and withdrawal account confirmed by the real name of the financial company’s operators, authentication of information protection management system (ISMS), and no criminal experience.
Those who fail to declare will be fined 5 million won or less. This actually means that the government will directly manage the cryptocurrency market within the scope of the law.
The obligations of financial companies dealing with digital asset operators include: checking the operator’s representative and transaction purpose, checking whether the operator submits a declaration and whether the fund is managed separately.
Based on the above principles, if there are digital asset operators that do not meet the regulatory requirements, they will be forced to retire.
However, the bill will not be implemented until one year later, during which all entities will have a six-month period to comply with the new law.
Some people are happy and others are worried about the policy
In the face of the good news from the South Korean parliament, the fastest reaction was won an.
This afternoon, coin an first tweeted to celebrate the successful entry of South Korea’s virtual assets into the system circle. Then, the official announcement of coin’an was that it had cooperated with Korea financial technology company BxB.Inc A joint effort was reached to issue a stable currency, binance KRW (bkrw), which anchored the Korean won (KRW). Issued in proportion to 1 bkrw = 1 KRW.
It can be seen that the direction of South Korea’s currency circle policy is clearly in the palm of one’s hand, and has launched its own new layout at the right time. Of course, it is not difficult to speculate that with the legalization of Korean cryptocurrency, more and more encryption enterprises will move closer to South Korea. However, this policy may not be particularly friendly for Korean local encryption companies.
In fact, although the South Korean authorities have brought cryptocurrency into the system circle, it also means that the government will directly manage the cryptocurrency market within the scope of law. From the main content of this special financial law, we can find that in order to reduce the risk and improve the transparency of encrypted asset transactions, the South Korean authorities have formulated quite strict obligations and standards.
We should know that the entry of the regular army often means the complete rise of the head and monopoly economy, and the cryptocurrency exchange is no exception.
Today, according to the News.Asia News: with the passage of South Korea’s special financial law, some investors worry that their preferred exchange may close down, charge higher fees or need to submit more supporting materials to continue trading on the platform, and they will suffer further losses.
In fact, by the end of the six-month grace period, there may actually be only four to six exchanges to choose from, because only upbit, bithum, coinone and korbit have real name banking systems, and gopax and hanbitco are using isms (information security management system).
In a word, with the legalization of cryptocurrency, for the local encryption enterprises in South Korea, the head enterprises will take advantage of the east wind of the policy and rise with the wind. On the contrary, those enterprises that can not meet the requirements of the standard will face cleaning up. For encrypted users, in the long run, users don’t have to face the hidden danger of being “harvested” by the exchange, but they may pay the price of privacy and high handling fees. Moreover, for those users who hold a large number of coins, there may be a large number of small tokens returning to zero.
However, with the institutionalization of cryptocurrency, we have to make trade-offs. At the same time, we can see that everything is going further and further on the road of more normal, more transparent and more acceptable.