A South Korean bill promoting cryptocurrency trading has been introduced in a bid to establish a robust digital asset ecosystem.
According to local media sources cited by BusinessTelegraph, South Korean lawmaker and National Assembly Political Committee member, Kim Sun-dong, announced the initiation of what he called the ‘Digital Asset Trading Promotion Act’. Elaborating on the intentions of the bill, Kim said in a press statement:
“‘The Digital Asset Trading Promotion Act’, includes a comprehensive plan for establishing a guideline for promoting the development of virtual currency exchanges and blockchain technology, tax reduction and exemption, measures against hacking damage, and prevention of market disturbances.”
Kim echoed the concerns that many have with regard to domestic crypto businesses leaving South Korea due to unaccommodating laws and regulations for digital assets. More specifically, Kim referred to the recent sale of cryptocurrency exchange giant Bithumb to a Singapore-based consortium. He acknowledged that domestic cryptocurrency transactions made up a significant percentage of domestic stock market trades at the beginning of this year, highlighting the negative economic impacts such moves can have.
Referring to the stifling impacts of over-regulation, Kim said:
“The government is focusing only on the risk of virtual currency and concentrating only on the crackdown of illegal activities… In order to lead the global trend of blockchain technology development, it is necessary to prepare laws and regulations as soon as possible.”
Due to the significant hacks that South Korean exchanges suffered earlier this year, regulators have sought to remedy the situation by increasing security and compliance measures. Though the move seemed positive at the time, it has eventually lead to exchanges being denied tax perks and financial incentives that are typically offered to venture capital firms as well as domestic small and medium-sized enterprises (SMEs). This has proven extremely unpopular among South Korea’s blockchain lobbyist groups and entrepreneurs.
Notably, the bill outlines that exchanges will be required to assume liability for customers crypto losses in the event of a hack.
As per the bill, “virtual content with an apparent value such as online money, points, game items and virtual currencies as digital assets”. It goes on to define exchange operators as digital asset trading companies, adding:
“Those who want to operate a digital asset trading business should have more than KRW 3 billion won [USD 2.66 million] in capital, enough manpower, computerized systems, and physical equipment to be approved by the Financial Services Commission [FSC].”
South Korea has been pressing tirelessly to establish laws and regulations that not only provide domestic startups with the grounding they need to thrive, but also establish whether or not initial coin offerings (ICOs) will be a part of the domestic blockchain ecosystem.
That said, South Korea is extraordinarily in favor of adopting blockchain technologies into public sector projects, voting systems, and energy grids. Should cryptocurrencies and ICOs fail to find the legitimacy they seek, the domestic blockchain industry should thrive as a whole, tokenized or not.
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