Though many in Korea’s blockchain space welcome recent movements to establish a regulatory framework for blockchain and cryptocurrency in the country, we’ve cautioned that the devil’s in the details.
That point was underscored at a blockchain conference convened at the National Assembly Members’ Office Building in Seoul on Tuesday (and reported on by ZDNet Korea).
Hosted by lawmaker Choi Jae-sung of the ruling Democratic Party, the Korea Society of Blockchain, Korea Blockchain Contents Association and Korea Blockchain Rating, the gathering discussed ways to put into action proposed revisions to the Financial Transactions Reporting Act and policy guidelines recommended by the Financial Action Task Force (FATF).
The revisions to the Financial Transactions Reporting Act await deliberation by the Legislation & Judiciary Committee and a plenary parliamentary session. Measures to put the FATF guidelines into law are underway, too.
The revised Financial Transactions Reporting Act requires “virtual asset service providers,” or VASPs, to register with the Financial Services Commission’s Financial Intelligence Unit (FIU). Failure to do so will win you up to five years in prison or up to KRW 50 million in fines.
The problem, however, is that while the law would require service providers to use real-name bank accounts, it does not spell out the conditions under which banks must provide said accounts.
Jeong Yeong-gi, a lawyer at prestigious Korean law firm Kim & Chang, reminded conference attendees that banks have so far been less than enthusiastic about providing real-name accounts to VASPs such as cryptocurrency exchanges.
Indeed, banks have so far granted real-name accounts to only four major exchanges.
Jeong warned that if legislation fails to specify conditions for issuing real-name accounts, banks could arbitrarily determine which cryptocurrency exchanges live or die.
He added that service providers with real-name accounts, too, face peril.
If a bank decides not to extend its contract with an exchange, the exchange could face ex officio cancelation of its registration. Exchanges that suffer ex officio cancellation of their registration must wait five years to re-apply.
Jeong told the audience that by bringing virtual asset transactions into the institutional fold, the revised Financial Transactions Reporting Act was a good thing. The problem is not what the regulation says, but rather what it leaves unclear.
He said for this reason, we need to clarify the regulations through a presidential enforcement ordinance.
