South Korea is in the making of a new bill that will ban all cryptocurrency-related transactions, including Bitcoin, unless the exchanges that host said transactions meet six conditions.
The Upcoming Bill
The government of South Korea is in the process of devising a bill which will change certain parts from the “Act on Regulation of Similar Reception” for it to include clauses for cryptocurrency transactions. “The purpose of this Act is to protect good traders and to establish a sound financial order by regulating Similar Receiving Behaviors,” is stated in Article 1 of the law.
“The government defines virtual currency transactions such as bitcoins as Similar Receiving Behaviors and prohibits them altogether.”- Money Today.
Cryptocurrency transactions are defined through the “storing, managing, acquiring, exchanging, trading, arranging, arbitrating and issuing virtual currency,” which are “all of the current exchanges’ business areas,” the publication further explained.
South Korea’s largest Bitcoin exchange Bithumb had to say on the matter that “A right set of regulations will rather nurture the (virtual currency) market, and we would welcome that,” suggesting that it will provide a more legitimate structure to the Bitcoin market.
The six required conditions
As cryptocurrency transactions have been increasing their volume more and more, regulators have made arrangements to permit crypto exchanges to operate according to legal parameters. The required six conditions have been named and additional conditions will be provided by a Presidential Decree.
The first criterion is that customer’s funds must be kept separately. The exchanges must also provide the users with thorough details involving the investment risks. The exchanges must confirm the user’s real name. They must also implement an adequate anti-money laundering system and must also incorporate an asset protection system such as dispersion or cryptographic keys. The last important condition is that transparency must be increased by disclosing transaction details to the public.
Penalties will be increased
One of the planned phrases to be included by the regulators in the amendment is “no one should engage in similar currency transactions”. It is believed that this bill will aid in the regulation in the matter of cryptocurrencies used to raise funds, purchase other cryptocurrencies, give credit, manipulate prices or to be used in pyramid schemes. In the meantime, initial coin offerings are still banned in South Korea.
The penalty for violating the current law of “Similar Receiving Behavior” is imprisonment for up to 5 years or a fine of up to 50 million won. ”The bill to come will introduce a punishment of 10 years of imprisonment or fines up to 500 million won”.
The bill will be submitted to the National Assembly soon. News.Bitcoin.com added that “Considering the realities of running an exchange, the government is considering a six-month grace period after the law is enacted.”