It’s no secret that North Korea is a fan of cryptoassets, which allow them to continue doing business despite the international blockade. Today it’s its little brother in the South with President Yoon at the helm who announces that he wants to adopt them.
Towards a regulation of cryptocurrencies in South Korea
If South Korea has always had an attraction for cryptos, the country has just passed the second. A regulatory framework for the industry is indeed planned for 2024.
The interest that Koreans have for virtual currency services and their applications is growing, especially in commercial exchanges. It is therefore logical that the government is looking into the integration of cryptocurrencies into its financial institutions.
According to the official document published in the Korean newspaper Kukmin Ilbo, the government authorities plan to adopt the Digital Asset basic Act (DABA) by 2023.
This law, among the 110 policy goals of the president, talks about digital assets such as cryptocurrencies and NFTs, but also Central Bank Digital Currencies (CBDCs). This is the first time that a regulatory plan dealing with Bitcoin and cryptocurrencies has been made public by the authorities.
What exactly is it about?
Currently, citizens wishing to obtain cryptocurrencies (Bitcoin, Eth, Shiba Inu, …) are limited. It is indeed possible to open accounts for trading digital assets only in four South Korean banks: NH Nonghyup Bank (Bithumb and Coinone), Shinhan Bank ( Korbit), K-bank (Upbit) and Jeonbuk Bank (GoPax).
The establishment of a regulatory framework aims to protect investors, stabilize settlement transactions, issuance, listing and market activities of cryptoassets. According to the words of the transition committee KYC (Know Your Customer) will be a central element to strengthen the links between crypto trading accounts and banks.
The bill will be based on international standards and will use the experience of the world’s largest economies. The draft will also involve the collaboration of the local Financial Stability Board (FSB) with the regulators of the United States and the European Union and the Bank for International Settlements ( BIS) based in Basel, Switzerland.
Towards a return of ICOs in South Korea?
Aware of the popularity of non-fungible tokens (NFT), which Instagram already integrates into its application, the Korean authorities plan to standardize them.
The other big news in this regulatory framework concerns cryptocurrency fundraising (ICOs). ICOs, whose ban in 2018 had been for some the reason for the last bear market, are expected to return to the forefront. Steps are indeed being taken to prepare the ecosystem and classify Initial Coin Offering (ICO) and Security Token Offering (STO).
If the disclosed document is not the final version of the DABA, it has been confirmed by the Yoon administration. The president announced on Tuesday, May 3, 2022 that he would postpone the taxation of profits related to the trading of crypto assets until the DABA in 2024.
This decision is one more act that the transition committee is working on in order to create an atmosphere conducive to the democratization of digital assets. The new taxation rules suggest that investors will be charged 20% on their profits above $2100 annually.
While writing this article, how can we not have a small thought for the ambassadors of cryptocurrency in South Korea that are Do kwon and Daniel Shin, the founders of the stable fire algorithmic corner UST and Luna with a drop from $119 to $0.0002366.
Co-founder of Coinpri, Expert in blockchain and NFT, I vulgarize the new web3 and blockchain paradigm here.