Now the South Korean financial regulator is reorganising so it can “proactively respond to financial innovation in the fourth industrial revolution era” — meaning it’s looking to nurture Bitcoin, cryptocurrency and blockchain.
The regulator — the Financial Services Commission (FSC) — has created the Financial Innovation Bureau to take oversight of the burgeoning crypto sector.
“The FSC plans a major organizational reshuffle to better protect financial consumers and proactively respond to financial innovation in the Fourth Industrial Revolution era,” an FSC statement read. “The new Financial Innovation Bureau will also be tasked with policy initiatives for financial innovation, such as innovating financial services using fintech or big data, and responses to new developments and challenges such as cryptocurrencies.”
The regulatory shake up has been welcomed by cryptocurrency watchers, with an official from the South Korea-based Fantom Foundation telling the Korea Times: “Virtual coin and related blockchain technologies will come to our everyday life sooner or later. I think Korea can be an ideal incubator to test drive new virtual coins and their blockchain systems. Now it is the government’s role to establish a favorable environment for virtual coins and their blockchains.”
South Korea has rapidly become one of the world’s Bitcoin, crypto and blockchain hubs, and is home to South Korea is home to one of the busiest virtual coin exchanges, Bithumb.
At the beginning of this year the Bitcoin price in South Korea was at one time 50% higher than the global average, CoinDesk data revealed earlier this year — which became known as the kimchi premium.
The kimchi premium peaked in January with Bitcoin trading at the equivalent of $22,525 in South Korea — some $7,500 higher than the composite price at the time.
Last month South Korea’s Supreme Court ruled that Bitcoin is a legally recognizable asset, overturning a decision made by one of the country’s lower courts in a case dating back to last year.
However, it hasn’t been all plain sailing for Bitcoin in South Korea. In June South Korean cryptocurrency exchange Coinrail was hacked over the weekend. A tweet from Coinrail confirming the cyber-attack sent the Bitcoin price tumbling some 10% at the time.
Last week, Korea brought in new anti-money laundering rules for cryptocurrency settlement that mean banks are obliged to expand due diligence procedures for cryptocurrency exchanges to their non-client accounts, to share information about overseas digital trading platforms with the FSC, and to halt immediately suspicious cryptocurrency transactions.