In an announcement on Business Korea, the South Korean government expressed their desire to get their own New York model. The new model will be similar to the cryptocurrency exchange approval system that is present in New York State’s BitLicense. The model reciprocates government’s new position over regulations on digital currency exchanges from shutting them down to safely manage them. However, no decision is expected until after June’s election.
New York State BitLicense Model
An official from a virtual currency task force indicated that South Korean government is considering the State of New York’s system. It is based on a system of allowing selective permission of virtual currency companies. The New York State requires exchanges to have a “BitLicense” to trade virtual currencies. All in all, the exchanges have to follow 15 detailed regulations in order to get BitLicense. The regulations include having a certain amount of capital and providing quarterly financial reports. By accepting the New York model, the Korean government will be able to regulate the cryptocurrency exchanges in proper order. I will also be able to supervise the market of any illegal activities. Most observers had expected the government to follow a hard line policy that included closing exchanges. The Financial Services Commission (FSC) had additionally said that government should put a restriction on virtual currencies.
The government changed its stance after cryptocurrency speculation subsided. The government doesn’t think it needs to regulate the market unless it becomes overheated. According to the government, a ban on cryptocurrencies will only hinder the growth of blockchain technology in the country. Industry leaders claim virtual currencies and the blockchain industry are closely related. Deputy Prime Minister and Minister of Strategy and Finance, Kim Do-Yeon also said it is not necessary to eliminate or suppress digital currencies.
Government approval is expected to significantly impact the market. Many traders agreed that it is not too late to establish a regulatory measure instead of banning it. Considering even International Monetary Fund (IMF) and G20 are discussing international regulations of cryptocurrencies. The South Korean government will hold a meeting this month to respond to a national petition. The official from South Korea stressed that the government will address future actions at the upcoming meeting.