The legislature of South Korea has passed a new bill that looks set to legalize cryptocurrency in the country, introducing a legal basis for regulating exchanges and other crypto businesses.
The National Assembly of South Korea’s legislation and judiciary committee approved the bill Thursday, following a series of delays and setbacks to the process. The new law introduces a framework for licensing and regulating crypto operators for the first time, which lawmakers hope will energize the country’s emerging crypto sector.
Per the new laws, operators in South Korea will now be required to adhere to the guidance set out by the Financial Action Task Force (FATF) on anti-money laundering and counter-terrorism financing.
Exchanges will also be expected to receive approval from regulators before offering services in the country, namely the Financial Services Commission (FSC) and the Korea Internet & Security Agency (KISA).
The laws also reflect on the risks of the rising number of attacks against exchanges, many of which have left users out of pocket. Alongside other precautionary measures built into the bill, the law looks to offer a greater degree of protection against hacks and frauds.
Crypto exchanges will be formally required to gain an Information Security Management System (ISMS) license from KISA in order to offer services to Korean residents. At the moment, only six exchanges hold this license, with some smaller exchanges expected to struggle to meet the compliance requirements of obtaining and maintaining the license.
The move follows on from several high profile hacks in the country, the most notable of which saw leading exchange Upbit suffering a $50 million loss at the hands of an attack.
The new digital currency bill has been welcomed across the crypto sector in Korea, as an important step towards structuring and legitimizing the crypto industry in the country.
Legal certainty provides operators with a benchmark for compliance, something which had until now been largely absent for those building crypto businesses within South Korea.
It follows from developments in India earlier this week, where the Supreme Court overturned a practical ban on banking services to crypto businesses in order to liberate the sector.
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