Korea’s ruling party says “let’s institutionalize cryptocurrencies”

The South Korean crypto industry may have renewed hope as the country’s ruling Democratic Party has launched a task force on cryptocurrencies – with the new body speaking relatively optimistically about the industry and the need to institutionalize cryptocurrencies into law.

South Korea’s ruling party says: “Let’s institutionalize cryptocurrency”

Despite the Financial Services Commission’s (FSC) relatively strict and inflexible stance on regulating the crypto industry – the measures could reduce the country to just four cryptocurrency exchanges that died this September, Democrats seem to think differently.

Earlier this year, senior government ministers began talking about the need to “suppress” an “overheated” crypto market.

The FSC sparked anger when Chairman Eun Sang-soo spoke about the need for smarter, older minds to lead young people away from the dangers of cryptocurrency investing. Eun’s comments led to a series of petitions calling for his resignation. And the Democrats who will vote in the spring 2022 general election have realized that their core support – younger voters – are increasingly interested in cryptocurrencies. Some argue that investing in crypto is “no longer optional” for the 20- to 39-year-old age group.

But a spiraling spike in house prices, a sluggish stock market and a stagnant job market caused by the coronavirus pandemic have hit the government hard, accusing the government of ignoring it and doing nothing to make the crypto sector go bad.

Opposition politicians liked to take the opportunity to criticize the government for its policies, with the largest opposition party claiming Seoul “neglected” the crypto industry and investors – and One even claimed that a lax security policy allowed North Korean hackers to be worth around $ 310 million to hack cryptocurrency from South Korean wallets in the past two years.

As a result, the Democrats appear to have responded by creating their own task force – aiming to soften the regulator’s stance and propose progressive laws.

According to EDaily, as well as News1 and EToday, the task force includes Congressmen, some of whom worked on the first South Korean crypto-specific legislation in 2019.

One of these MPs commented at a press conference:

“I know the Financial Services Commission has a negative attitude towards cryptocurrencies, but as the market grows, so does the number of people entering the field.”

Another claimed the task force was ready to “discuss” the issue of delaying the start of crypto taxation rules. The South Korean National Assembly has agreed to tax crypto profits at a flat rate of 20% from January 1st next year. But a private member’s bill comes on the table by an opposition MP who wants to postpone the measure until 2023. The ruling party’s task force claims it has taken note and is ready to evaluate the value of the bill.

The task force also talked about implementing a system that would give crypto-related companies the same business rights that other companies in the country enjoy. Currently, cryptocurrency exchanges and other service providers are legally classified at the lowest corporate level, which legally equates them with nightclubs and karaoke bars.

The task force said:

“There are some laws related to virtual assets overseas, but we believe there is probably no country that has an independent franchise law for cryptocurrency miners. If we create such a law, we will probably be the first. “

Kim Byung-wook, secretary of the task force, is quoted as saying:

“It is time we brought the crypto industry into the institutional system.”

Will the institutionalization of cryptocurrencies manage to save Korean exchanges in time?

Even if Democrats want to institutionalize crypto, the question still arises of whether or not the government’s tough easing on crypto-related issues will come in time to save most exchanges from the Korean cryptocurrency shutdown.

Kyungjae Asia said crypto exchanges that can’t meet the long list of FSC requirements by September 24 could begin closing as early as next month – with peer-to-peer financial (P2P) platforms to join.

About 20-30 exchanges have indicated that they are trying to obtain the necessary licenses to resume trading before September, but at least 30 other exchanges appear to be making no significant effort by September. Around 100 P2P financial operators could also be set up to fold.

An unnamed financial industry insider was quoted as saying:

“A ‘coin run’ could happen in September if all users try to withdraw their coins and some at the same time [sẽ] not redeemed. There is a high chance they will turn to banks to get their money back rather than exchanges that are about to close. “

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