The rules to tackle the money laundering among other crimes in cryptocurrency market came into full effect in South Korea, on Tuesday. It is expected that these new cryptocurrency rules will be positive in the long term and will bring legitimacy to the cryptocurrency market. Earlier this month, the plans to introduce regulations had frightened the South Korean investors initially. However, in the wake of events that propelled the development of new cryptocurrency rules, the country exhibits a great example for other economies to develop their own crypto rules.
New Cryptocurrency Rules into effect in South Korea
Earlier this month, the regulatory authority of South Korea planned to tackle the investors that are spooked by the speculations surrounding cryptocurrency. With the new rules taking effect on Tuesday, the cryptocurrency market participants are much happier and positive.
According to a media source, The Financial Services Commission (FSC) of South Korea confirmed on Tuesday that the new measures that have been outlined in a document by the body in the starting of the month have been now implemented. However, a spokesperson of FSCF said that it’s too early to discuss the effects of these rules yet.
As per the document that outlines the rules and was published on Jan.23, the regulator is only allowing the trade in cryptocurrencies from the real-name bank accounts, starting from Jan 30. The rules will basically enable the banks to comply with KYC AML i.e know your customer, anti-money laundering, obligations as explained by the document.
Investors believe the new rules will prove to be positive in the long term
The FSC further added in the document that the intention behind the outlined measures is to basically reduce the chances of cryptocurrency transactions getting exploited for illegal purposes such as tax evasion, crimes, and money laundering.
Julian Hosp, the co-founder, and president of the cryptocurrency startup, talking positively about these New Cryptocurrency Rules rules explained that:
“I think it’s the start of a crackdown on anonymity and the illegal use cases that some cryptocurrencies might have. If afterward, investors and companies have more legal security working in the ecosystem, it’s going to have some short-term downsides, but long term, it’s going to have a really, really big boost.”
The decision to implement the new rules came after the mixed reactions from the South Korean officials about regulation.
John Sarson, the managing partner at Blockchain Momentum that invests in blockchain and cryptocurrency related companies said these rules allow for legitimacy and greater scale:
“Protocols to protect investors have been what the cryptocurrency markets have been missing and it’s what the legislation in South Korea seeks to implement. It’s a good thing anytime an investment exchange knows their client and makes sure that their clients are doing things that are above board legally.”
According to Cryptocompare, Korea has about 4% denomination in bitcoin trading, with 40% transacted in Japanese yen and 30% in dollar terms. Despite having a small proportion, it is likely that South Korean regulations will have a big impact on the market.
With the hack of $530 million worth of cryptocurrency from Japanese exchange Coincheck, regulations have taken the spotlight again.
Last year, when South Korean authorities talked about a potential ban on cryptocurrency market, an official petition was signed by its citizens against government’s step. With over 250k signatures, the petition made the government rethink its take on cryptocurrencies. This resulted in the creation of a set of rules that work towards the legitimacy and a much better cryptocurrency space.
With virtual currency being a hot topic of consideration for both investors and authorities alike, all over the globe, South Korea’s move to implement the new rules is something that other countries can look forward to. South Korea is a quintessential cryptocurrency regulator that can be taken as a model to create demographic and topography specific crypto rules.
What do you think will be the effect of these regulations on cryptocurrency market? Let us know your thoughts in our comment section below!
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I am an associate content producer for the news section of Coingape. I have previously worked as a freelancer for numerous sites and have covered a dynamic range of topics from sports, finance to economics and politics.