South Korea remains the third-largest crypto exchange market by volume, just behind the United States and Japan. Despite that, throughout the past three years, the government of South Korea has opted against fully regulating the local crypto market.
In the second half of 2019, the government of South Korea started to work on several bills that would further legitimize the crypto sector and allow it to evolve into an established industry.
Below is the complete timeline of the passing of bills and controversy surrounding the regulatory side of crypto in South Korea since 2017, and what is expected to come in the future.
Timeline of regulation and controversy regarding crypto in South Korea
July 3, 2017:
Park Yong-jin, a member of the National Policy Committee from the ruling Democratic Party, introduced the first-ever taxation policy for crypto. Park proposed the imposition of transfer tax, not capital gains tax, on cryptocurrency trading.
July 31, 2017:
Park Yong-jin introduced the Electronic Financial Transactions Act that was ultimately passed on Oct. 19, 2017, which covered cryptocurrencies. The regulatory framework tightened Know Your Customer and Anti-Money Laundering policies around crypto.
Sept. 1, 2017:
The government of South Korea, in cooperation with the Financial Services Commission, established a task force to explore the transparency of cryptocurrencies and regulatory frameworks surrounding the asset class.
Dec. 4, 2017:
December 2017 was when controversy, uncertainty, and, therefore, the involvement of the South Korean government in regulating cryptocurrencies reached a peak.
As a result, the Ministry of Justice revealed that it is forming a cryptocurrency regulation task force with the intent of implementing stricter guidelines for trading. The Ministry of Justice, Ministry of Economy and Finance, Financial Services Commission and several other agencies contributed to the task force.
Dec. 11, 2017:
As the Bitcoin (BTC) price started to see an explosive rally amid increasing speculation, the government started to hint at a full ban on cryptocurrency trading. Choi Jong-gu, the head of the Financial Services Commission, said in a press conference that the commission is looking into the possibility of imposing a comprehensive ban on crypto trading.
Choi’s statement was the start to a highly controversial month for crypto and the government of South Korea. Different agencies and commissions were expressing a contrasting stance toward cryptocurrency regulation, and it led to the intervention from the Blue House, the official office of South Korea’s president.
Jan. 11, 2018:
Controversy and outrage regarding the government’s lack of direction in regulating the cryptocurrency market hit when former Justice Minister Park Sang-ki said that a bill to ban cryptocurrency exchanges was coming. He said that there is no difference in opinion between the Ministry of Justice and the Financial Services Commission.
However, almost immediately after the statement of former Minister Park, the Blue House said that nothing is set in stone, essentially refuting the statement of Minister Park.
Jan. 15, 2018:
The government clarified that it does not plan to enforce a ban on cryptocurrency trading or exchanges. But it emphasized that it will tighten policy regarding market manipulation, money laundering and tax evasion.
Jan. 16, 2018:
In a State Council meeting led by President Moon Jae-in, the controversial statement of former Minister Park from a week prior was mentioned. The meeting concluded that Park’s statement was premature, and there was no formal agreement between the Ministry of Justice and the Financial Services Commission.
Feb. 18, 2018:
A seminar was conducted with members from the ruling Democratic Party (People’s First Party) and the opposing Liberty Korea Party to discuss cryptocurrency regulations. The attendees concluded that there is a clear need to lessen confusion around cryptocurrencies and to further evolve the blockchain space into a fast-growing industry.
July 26, 2018:
Since the formal establishment of a cryptocurrency task force in December 2017, no major progress or bills were proposed. It led to criticism from the media, cryptocurrency investors and companies that claimed the government was implementing a hands-off approach once again.
Oct. 16, 2019:
Fueled by growing regional initiatives from major cities like Seoul and Busan, the blockchain industry of South Korea started to see rapid growth.
Specifically, describing blockchain as a key technology in the Fourth Industrial Revolution, South Korean Finance Minister Hong Nam-ki revealed the National Development Plan for Digital Trade. He cited blockchain as an important technology for the new initiative.
Nov. 26, 2019:
After almost a full year of silence from the government of South Korea, a new bill that would provide cryptocurrencies a legal foundation in the years to come was pushed forward. South Korea’s National Assembly’s national policy…