According to Forbes, the Financial Services Commision [FSC], South Korea’s financial regulatory authority is looking to develop the cryptocurrency and blockchain space. The FSC plans to do this by restructuring itself to accommodate the existence of the Financial Innovation Bureau and to ‘proactively respond to financial innovation in the fourth industrial revolution era’.
In a recent statement, the FSC has said:
“The FSC plans a major organizational reshuffle to better protect financial consumers and proactively respond to financial innovation in the Fourth Industrial Revolution era.”
In order to implement the culture of financial innovation, the new bureau will also be responsible for initiating policy changes. It will work on advanced financial services with the use of big data, fintech and look into the development and challenges related to cryptocurrencies.
Earlier this week, the international Financial Stability Board [FSB] issued a report that stated, “Bitcoin and its fellow cryptocurrencies are not a material risk to the economy on a global level”. The report also incentivizes a lenient approach on the subject. South Korea is one of the members of the FSB.
This reorganization of the FSC has been taken in goodwill by many in the cryptocurrency space. A blockchain industry firm called Fantom Foundation, which is based out of South Korea, told the Korea Times:
“Virtual coin and related blockchain technologies will come to our everyday life sooner or later. I think Korea can be an ideal incubator to test drive new virtual coins and their blockchain systems. Now it is the government’s role to establish a favorable environment for virtual coins and their blockchains.”
In the cryptocurrency world, South Korea has been ahead of many, with a rapid growth of Bitcoin, other cryptocurrencies and blockchain hubs in the country. For instance, Bithumb is a South Korean cryptocurrency exchange that is also known to be one of the biggest in the game.
The initial phase of 2018 saw South Korea possess a 50% higher price of Bitcoin than the global average. This was considered as the kimchi premium of the South Korean cryptocurrency market. A kimchi premium is determined by comparing the gap between the prices of cryptocurrency in South Korean exchanges with that of the global market.
After the kimchi premium reached its pinnacle at the beginning of 2018, the prices only kept wearing off to new lows.
In terms of Bitcoin’s acceptance and adoption, South Korea has been doing well, as the Supreme Court of the country ruled in favor of Bitcoin being a legally recognizable asset. Last year, one of the lower courts made a decision against Bitcoin, which was ultimately overturned by the recent ruling of the apex court.
During the month of June, Coinrail, a cryptocurrency trading platform in South Korea, was hacked. This dragged down the price of Bitcoin by 10%.
Banks in South Korea are now obliged to apply their procedures even on the cryptocurrency exchanges for their non-client accounts. They will be required to keep all the digital assets related information transparent to the FSC to avoid any fraudulent twists in the advancing financial space. This happened after South Korea introduced its new anti-money laundering solutions for the cryptocurrency space last week.
Last week, South Korea brought in new anti-money laundering rules for cryptocurrency settlement that means banks are obliged to expand due diligence procedures for cryptocurrency exchanges to their non-client accounts, to share information about overseas digital trading platforms with the FSC, and to halt suspicious cryptocurrency transactions immediately.
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