On December 13, 2017, relevant authorities within the government of the Republic of Korea (including the Ministry of Strategy and Finance, the Ministry of Justice, the Financial Services Commission, the Korea Communications Commission, the Korea Fair Trade Commission, and the Ministry of Science and ICT) jointly announced proposed emergency measures to regulate cryptocurrency.
Described below are the major points of the announcement which include measures which the Korean government indicated it hopes to undertake in the near future.
First, measures to deal with illegal activities using or relating to cryptocurrency. They include:
• crackdowns on crimes relating to cryptocurrency such as investment invitations via unlawful fund-raising or multi-level marketing, fraudulent sales of cryptocurrency, transactions involving illegal substances or materials, and concealment of profits from illicit activities;
• investigations of standardized terms and conditions used by the cryptocurrency exchanges, especially the major exchanges; and
• regular inspections to prevent hacking and personal information leakage and potential imposition of sanctions in the event of violation of applicable laws and regulations with respect thereto.
Second, measures also include methods to prevent overheated speculation arising from unregulated market entry by new investors, including:
• a regulation to ensure that only the account holder may deposit into or withdraw from his or her bank account;
• a ban on minors and non-resident foreigners from opening an account for, or engaging in, cryptocurrency transactions; and
• a prohibition on all activities relating to cryptocurrency transactions by domestic financial institutions, such as holding, purchasing, taking as security, or otherwise investing in cryptocurrencies.
Third, measures to regulate cryptocurrency transactions by enacting laws and regulations to prohibit cryptocurrency transactions unless certain requirements are met, such as measures to protect investors and secure transparency in transactions.
The initial reactions to the proposed emergency measures appear to be somewhat negative — some criticize that they will have only little impact on the already overheated market while others question the effectiveness in general of such measures.