According to the media outlet, The News Asia, the South Korean National Assembly had officially passed an amendment in its Reporting and Use of Specific Financial Information Act. This amendment allows for cryptocurrency trading to be legalized. One of the local South Korean media outlets, Maeil Kyungjae, had initially been revealed the motion to amend this bill, had received unilateral support for it. One hundred eighty-two votes were in favor of the amendment, and the vote faced no vote against it.
New Reporting Mandate
The law itself will come into effect exactly 12 months after the signing date. Furthermore, a 6-month grace period will be allowed for cryptocurrency exchanges in order for them to comply with the new regulations put in place. Tallying it up, by September 2021, all the Bitcoin wallets and crypto exchanges within South Korean borders, will be mandated to abide by these amended laws.
The amendment mandates that crypto businesses, exchanges included, must comply with the same requirements in reporting that other financial institutions in Korea do. The bill legalizes crypto trading within South Korea and holds various provisions that follow closely to the guidelines that were initially established by the Financial Action Task Force, or FATF.
Crypto Integration On The Rise
The decision to legalize crypto in South Korea comes shortly after the news hit regarding the ban on crypto being lifted in India. The Reserve Bank of India had mandated all banking firms regulated by them, to refuse to provide services to crypto companies. After a lengthy court case, it was determined by the Supreme Court of India that this should not be the case. Like in India, many exchanges within Korea had already shut down their various businesses, citing the regulations as being unfavorable to their respective business models.
Too Much Regulation
It had already been established that significant blockchain and crypto stakeholders were crying foul due to the regulatory climate that the country had created. As a result of these regulations, many blockchain startups had opted to move their token listing to overseas exchanges as the South Korean crypto market was shrinking. It went to such a point that reports started to emerge in August of 2019, speculating that 97% of all crypto exchanges in South Korea are running the risk of bankruptcy.
As it stands now, things don’t look suitable for South Korea’s crypto industry. What the country will do to help spur its growth remains to be seen, but there always needs to be a sweet spot between regulation and a free market, lest businesses just go elsewhere.