The Korean-language blockchain news website Block Media recently compared how countries around the world were responding to the FAFT’s guidelines on regulating the cryptocurrency industry, focusing on three countries in particular: Japan, France and Korea.
Block Media notes that Japan has been relatively proactive in bolstering its regulatory framework for cryptocurrency — not surprising, given the country’s early start in institutionalizing cryptocurrency. Last month, the upper house of Japan’s national legislature passed amendments to the country’s financial instruments and payment services laws that, among other things, changed the term for cryptocurrency to “crypto assets” and called on exchanges to store customer assets in cold wallets blocked from the internet. The amendments also made cryptocurrency margin trading subject to Japan’s financial instruments law and placed limits on excessive advertising related to cryptocurrency exchanges.
Japan’s financial authorities have also begun cracking down on local cryptocurrency exchanges, targeting in particular anonymous transaction providers and exchanges with insufficient ID verification procedures. The crackdown has Japan’s fourth mutual evaluation by the FAFT this autumn in mind.
France, too, has adopted a law that clearly sets out regulations for cryptocurrencies and ICOs. The Action Plan for Business Growth and Transformation, passed in April, grants licenses to cryptocurrency service providers such as exchanges and makes them subject to supervision by the nation’s financial authorities.
In contrast to these examples, says Block Media, stands Korea, where regulations are still unclear (see our post here on Korea’s blockchain regulation regime). Korea lacks laws regulating blockchain and the government is sticking to its de facto ban on ICOs. The Financial Services Commission (FSI), too, is rejecting applications from cryptocurrency-related projects to play in the country’s regulatory sandbox.
(As CoinDesk Korea notes, however, the FSI is apparently OK with blockchain — rather than cryptocurrency — solutions, in line with the government’s de facto policy of dividing the two. Incidentally, one of the five blockchain projects the FSI approved for the regulatory sandbox was ICONLOOP’s “my-ID” authentication service.)
Block Media says you can attribute the government’s lack of enthusiasm in regulating the cryptocurrency industry to official concern about sparking speculation. If the government appears to be moving towards regulating the cryptocurrency market, so the argument goes, people could read that as an official imprimatur of said market, leading to mass speculation as in the past. You could read the government’s concern in its comments during Bitcoin’s recent price spike, too, when Korean officials warned that cryptocurrency was not legal tender and subject to great fluctuations in value due to illegal activity, speculative demand and changes in the local and international regulatory environment.
For what it’s worth, the National Assembly’s Science, ICT, Broadcasting and Communications Committee recently gave a “positive evaluation” to two bills that would do away with the de facto ICO ban. And Park Jong-baek, a lawyer who specializes in ICT issues, recently told the @Blockchain Meetup in Seoul that the FATF guidelines would force changes to the Korean government’s current strategy of ignoring cryptocurrency. He said that though the government has avoided regulating the market for fear of institutionalizing companies that offer virtual currency services, the FAFT has made strategic neglect untenable as doing nothing would violate Korea’s obligations as a FAFT member state.
And elsewhere in the Korea blockchain space…
First Blockchain-Managed Container Shipped to the Netherlands
(By the Maritime Executive, July 1)
A paperless, instantly financed and fully door-to-door tracked container was shipped from South Korea to Samsung SDS’s warehouse in the Dutch city of Tilburg via the Port of Rotterdam using DELIVER, a blockchain platform jointly developed by Dutch bank ABN AMRO, the Port of Rotterdam and Samsung SDS. With that Proof of Concept successfully completed, the three partners have signed an extended collaborative agreement for the next phase of the DELIVER project, which would be to conduct pilot projects with multiple shippers from various industries operating in different trade lanes. The ultimate goal, however, is to create an “open, independent and global cargo shipping platform.”
South Korea’s Busan eyes launch of own blockchain-based cryptocurrency
(By TokenPost, July 2)
Busan, Korea’s second-largest city and largest port, is teaming up with BNK Busan Bank and some blockchain companies to create a regional cryptocurrency — more specifically, a stablecoin pegged 1:1 to the Korean won in a BNK Busan bank account.
South Korea’s Largest Telecom SK Group Invests $10M in ConsenSys
(By Helen Partz, Cointelegraph, July 2)
The parent group of Korea’s largest telecom company has invested USD 10 million into global blockchain firm ConsenSys. Speaking at a tech startup event, SK Corporation chairman Chey Tae-won said that traditional business approaches “should be digitized” and that blockchain and the token economy “can be separated.”
South Korea’s Shinhan Bank Is Cracking Down Harder on Anonymous Crypto Users
(By Richard Meyer, CoinDesk, July 4)
Shinhan Bank is redoubling efforts to police accounts related to cryptocurrency exchanges in a bid to quash anonymous cryptocurrency transactions. “Because the news suggests a change in policy, it has generated some buzz in the country,” writers Richard Meyer at CoinDesk. “But the July 1 move by the institution is little more than the latest step in the refinement of relevant processes and procedures, a development that has been ongoing for more than a year. Crypto is not being locked out from the Korean banking system. The landscape is evolving with changes in the business and in the compliance environment.”
‘Crypto will never be recognized as legal currency’
(By Lee Kyung-min, Korea Times, July 4)
Talking with the Korea Times, Morgan Stanley economist Andy Xie offered some critical comments regarding cryptocurrency. “Bitcoin is primarily a gambling instrument for Chinese, Koreans and Japanese,” he said. “Even though so many argue it could be used to replace the fiat currency, its huge volatility makes it impossible.”
South Korean Gaming Companies ‘Investing Heavily’ in Blockchain Titles
(By Tim Alper, CryptoNews, July 1)
Korean IT and gaming companies are investing heavily in blockchain-powered games, a trend that could promote greater understanding and use of cryptocurrencies in Korea.
