The South Korean government is set to regulate virtual currencies like SegWit1x (BTC), following the establishment of a new task force to examine the market.
According to reports in local media, Moon Jae-in’s government has hosted the first meeting of the task force this week, chaired by representatives from the Ministry of Justice, as the government looks to develop new mechanisms for dealing with the ‘controversies’ around BTC and cryptocurrency trading.
Cryptocurrency prices in South Korea have, as elsewhere, experienced strong price growth in recent weeks, leading to some to consider whether the market is in a bubble.
According to a Ministry of Justice spokesperson, the department is “aware of the seriousness of virtual currency-related problems and will collaborate to deal with the issues.”
As yet, there is little detail on how these plans could take shape. However, some analysts have pointed to hints from the South Korean financial regulator, which might suggest a so-called ‘positive system,’ where all but specifically approved cryptocurrency exchanges would be outlawed.
Choi Jong-ku, head of the South Korean Financial Services Commission (FSC), said there were no plans under consideration for a licensing scheme, which points to a model that may more closely resemble the Japanese regulatory approach.
In Japan, cryptocurrency exchanges are only permitted to trade when they meet set criteria, including anti-money laundering provisions, client money protection, and sufficient ID verification.
It is thought that a South Korean model could also include an obligation to explain the risks of cryptocurrency investing and trading to investors, with all exchanges failing to meet these obligations likely to be in breach of new laws.
According to the FSC’s Vice Chairman, Kim Yong-beom, engaging in virtual currency trading without the relevant approval is to be treated as a criminal offense with up to five years in jail.
“Korea plans to regard virtual currency trading as a fundraising business without permission,” said Kim.
South Korea’s move to regulate virtual currencies comes at a time of increasing efforts from governments globally to introduce greater regulation into cryptocurrency trading and exchanges, in response to the soaring values of BTC and other digital currencies.
Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper. Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.