The country wants to use a new law to ensure that crypto-tokens and other virtual currencies are formally classified as digital assets.
With South Korea, one of the crypto-friendliest countries now wants to create a foundation for the business of cryptocurrency companies. As officially reported in the English language version of the Korea JoongAng daily newspaper, the National Policy Committee of the South Korean National Assembly has passed a bill to regulate cryptocurrencies in the country. The law creates a framework by which crypto-tokens and other virtual currencies are formally classified as digital assets.
Crypt currency exchanges in South Korea have not been classified as financial institutions, but as information providers. Therefore, they fall under the jurisdiction of the Korean Ministry of Science and not the Korean Financial Supervisory Authority. After accusing the government of not doing enough to prevent hacking damage, the Financial Supervisory Service (FSS) said it would broaden its accounting practice to include the country's large crypto currency exchanges.
The bill also sets rules for companies related to cryptocurrencies and other virtual currencies. All companies that hold or trade in virtual currencies must now receive an ISMS (Information Security Management System) certificate from the Korea Internet and Security Agency (KISA) and become a company with digital assets at the Financial Intelligence Unit (FIU) to register.
In addition, cryptocurrency companies must ensure that their anti-money laundering systems comply with the best practices from the International Financial Services Task Force (FATF). Companies that do not comply with these standards will be punished and serious legal measures will be taken against them. After the South Korean constitutional process, it takes about a year for the law to come into force.
This is not the first time that the South Korean government has attempted to regulate the crypto space within its borders. Last year, the authorities banned the anonymous cryptocurrency trade and later introduced new anti-money laundering standards. South Korea is one of the few countries in the world that has turned out to be cryptocurrency-friendly - at a time when most nations are still grappling with the notion of decentralized ledger technology.
According to the recent report of the Central Bank of South Korea, the South Korean stock exchanges have approximately $ 1.9 billion of cryptocurrencies in their accounts.