Asia’s 4th largest economy, South Korea officially accepted cryptocurrency trading and holding this Wednesday. Undoubtedly, this is a remarkable decision by the South Korean National Assembly. The excitement among the crypto proponents is skyrocketing. And that is because earlier this week Indian Supreme court also favored cryptocurrencies.
An amendment to Act on Reporting and Use of Specific Financial Information introduced cryptocurrency to South Korea’s official system. However, this would be followed by a reshaping of the domestic blockchain industry.
Cryptocurrency now fully legal in South Koreahttps://t.co/sqt07uxW8j
— Su Zhu (@zhusu) March 5, 2020
Winds of Change – New Coin Age
According to the details shared by local news media, the amendment was proposed 2 years back. And it intends to bring order to the ‘wild west’ regulatory landscape of cryptocurrency trading. After a two-year-long deliberation, the amendment stands passed.
However, the enactment will start only after President Jaein Moon signs the amendment and this is going to be a yearlong process. To make sure the effected entities ensure complete compliance, the government has also granted a 6-month grace period. Effectively, the exchanges and crypto-related companies will have to give up self-governance and comply with the new set laws from September 2021.
The Real Law
According to the new laws, the exchanges, ICOs and wallet companies need to hold real-name verification partnerships with any approved Korean bank. This setup will prevent the money laundering to a larger extent. Currently, a handful of exchanges Upbit, Bithumb, Coinone, and Korbit do comply with the real-name verification system.
But there is more.
The companies are also required to have a valid certificate in Information Security Management System (ISMS). Granted by the Korea Internet Security Agency (KISA), this certificate is a costly affair. Failing to acquire the certificate, the companies are at risk of being closed. Currently, only Upbit, Bithumb, Coinone, GoPax, and Hanbitco hold ISMS certification.
Not everyone is cheering
South Korea’s official recognition of crypto might not be good news for everyone. Some investors believe, that the recognition will attract trade taxes. Effectively, the crypto traders will have to unhand a part of their profits to the government accounts.
For others, their opinions are fogged by the bloodbath of the traditional stock market. They believe the regulation will lead to a cooldown of crypto values just like traditional stock exchanges.
What happens at the end of the grace period?
The regulation could lead to unrest among the crypto exchanges. Some might succumb to compliance pressure and shut down, while some might chose to move to crypto liberal nations. All in all, the South Korean crypto enthusiast might have access to a lesser number of crypto exchanges.
However, this official acceptance will prove to be great news for crypto in the long run. Could this be a reason for Bitcoin’s 2.1% pump in the last 24 hours?