Since its inception, there has always been disagreement over what cryptocurrencies really are. The name should give you a hint, right? However, some do not believe that it is a currency.
On one hand, this aspect may be frustrating for crypto enthusiasts, but it has surprising benefits. If it is not a currency, it can not be regulated that way. This is at least the position of South Korea.
According to the Financial Supervisory Service (FSS), cryptocurrencies do not have any form of legal tender, so they do not regulate trade. However, the country will still apply stricter rules against its larger stock exchanges. This legislation will place a strong emphasis on investor protection and taxation.
Although these rules do not affect trade, the country believes that the rapid growth of the crypto market requires some sort of framework. A government spokesman has already said:
“The South Korean government has no choice but to follow the regulatory frameworks and trends introduced by other major governments, and while cryptocurrencies are likely to have a negative reputation, the government’s position is to allow what is allowed in favor of the South Korean market. ”
These exchanges, Bithumb, Coinone and Korbit, responded positively to the news, with Bithumb saying:
“A good regulation will power the market (virtual currency) and we would love that.”
This does not mean that the country fully accepts digital currencies. FSS Governor Choe Heung-sik said the institution would continue to warn the public of the risks of cryptography. He said:
“We can only warn people that we do not see virtual currencies as real types of money, which means we can not strengthen regulation for the time being.”
The FSS also believes that any regulatory action itself is perceived by investors as the country that recognizes cryptography as a means of legalized exchange.
Heung-Sik’s recent comments are similar to those made in November this year. At the time, the governor said the FSS would not be directly responsible for monitoring crypto changes simply because digital currencies are not a legitimate substitute for fiduciary money.
Although South Korea does not regulate trade, there are rules for cryptocurrencies.
In addition to these rules, the National Tax Service (NTS) is in the process of writing a framework that raises the tax on every cryptographic transaction in the country. It is also likely that the NTS will spend capital gains taxes on both individuals and companies using crypto.
This means that the South Korean government can continue to enjoy the financial benefits of the cryptography industry without having to fully regulate it.