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South Korea’s crypto community has had to adapt to a suite of new regulations and government frameworks over the past years. Having caused endless confusion, the government has now laid out which state and regulatory bodies are charged with the oversight of various aspects of crypto-related activities.
In a statement released on Friday, the Korean government is aiming to clarify any confusion as to which Korean government agency or regulatory authority is tasked with overseeing various aspects of crypto-related activities. Following the statement, the Financial Services Commission, or FSC, will be monitoring digital asset businesses, establishing regulations for the industry and ensuring compliance with any anti-money laundering regulations.
The FSC’s current head, Eun Sung-soo, has recently has some backlash from the crypto community following some of his remarks about the digital asset class. Sung-soo has always denied that authorities have an obligation to protect investors just because of the rising popularity of crypto.
Sung-soo nonetheless has softened up as Friday’s report indicates. The report says that investors who transfer their holdings to crypto firms that are registered with the authorities will be protected by the government. However, since crypto is still not recognized as a currency or financial product in South Korea, personal responsibility remains paramount:
“No one can guarantee its value, and there is a risk of massive losses due to the volatile exchange environment at home and abroad.”
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In a joint effort and aiding the FSC, Korea’s Finance Ministry, Fair Trade Commission and National Tax Services, and Customs Service will all be overseeing specific areas of crypto regulation and supervision.
Importantly, it is required that all crypto businesses, custodians, exchanges and brokerages, have to be registered with the Korea Financial Intelligence Unit before September 25 this year. For those not meeting the deadline, jail-time of up to five years and a 50-million-won ($45,000) penalty is a possibility.
Korea’s tax law will come into force by January 1, 2022. Crypto-users can expect a 20% taxation on Bitcoin and other cryptocurrency on profits over 2.5 million won ($2,250). Businesses operating in the crypto space will be required to use real-name accounts at banks. So far, only four out of the 60 exchanges estimated to be active in the country, are compliant with this requirement, according to the government.
The regulatory clarity comes after the Korean Central Bank announced the start of a Central Bank Digital Currency trial this summer.