A better deal for South Korea’s cryptocurrency industry might be in the offing as the market regulator changes tack from its tough stance on the virtual coin trade, promising instead to help promote blockchain technology.
The regulator on Tuesday said that it hopes to see South Korea — which has become a hub for cryptocurrency trade — normalize the virtual coin business in a self-regulatory environment.
“The whole world is now framing the outline [for cryptocurrency] and therefore [the government] should rather work more on normalization than increasing regulation,” South Korean Finance Supervisory Service (FSS) Governor Choe Heung-sik told reporters.
The latest news suggests authorities might adopt a lighter regulatory touch, a step change from the South Korean justice minister’s warnings last month that the government was considering shutting down local cryptocurrency exchanges, throwing the market into turmoil.
FSS has been leading the government’s regulation of cryptocurrency trading as part of a task force.
Virtual currency operators see Choe’s comments as positive step for the industry’s plans for self-regulation.
“Though the government and the industry have not yet reached a full agreement, the fact that the regulator himself made clear the government’s stance on cooperation is a positive sign for the markets,” said Kim Haw-joon of the Korea Blockchain Association, a working set of big cryptocurrency exchanges that is planning to launch its own regulatory body.
South Korea banned the use of anonymous bank accounts for virtual coin trading as of Jan. 30 to stop cryptocurrencies being used in money laundering and other crimes.
Three local banks — Shinhan Bank, Industrial Bank of Korea, NH Bank — offer cryptocurrency accounts to about five local virtual coin exchanges.
Choe said that Kookmin Bank and KEB Hana Bank might have also put in place an appropriate system, though they have not yet started handling transactions.
“I hope they [the banks] no longer fear authorities once they have the right system,” Choe added.
An official from FSS said that tough regulatory oversight of illegal trade in cryptocurrencies would remain in place.
Bitcoin, the world’s most heavily traded cryptocurrency, is now changing hands at a three-week high of US$11,160 on the Luxembourg-based Biststamp exchange after falling as low as US$5,920.72 earlier this month.
South Korean electronics giant Samsung has already started production of cryptocurrency mining technologies, local media reported last month.
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