Regulation related to Bitcoin and cryptocurrencies is always a touchy subject. South Korea recently introduced a new “regulation act’ related to Bitcoin. This was well announced in advance, though. Park Yong-Jin is the person responsible for this development. Under this new law, there will be five classifications of cryptocurrency handles. Additionally, some business models will be outlawed entirely, which is a smart decision.
For the time being, this new regulation will have no negative impact. It is good to see a regulatory environment for cryptocurrencies in South Korea. This is an amendment to the country’s Electronic Financial Transaction Act. Regulating Bitcoin and other currencies is not always negative. In fact, it creates a legal environment in which these currencies can operate moving forward. One downside is how certain business models will need to rethink their strategy.
South Korea’s Attempt at Regulation is Positive
Given the increasing popularity of cryptocurrency in Korea, such a regulatory measure was to be expected. After all, both Bitcoin and Ethereum have soared in value throughout 2017. However, up until last week, there was no legal clarification as to who can sell cryptocurrencies. Additionally, there were no restrictions on this business model either. With these new proposals, there will be five different classifications of cryptocurrency handlers. A clear definition of how different people and companies fit into specific categories is a positive trend.
More specifically, the law distinguishes between traders, dealers, brokers, issues, and managers. This latter part is quite interesting, though. Anyone storing or managing cryptocurrencies on behalf of others will be a manager from now on. It will be interesting to see if that means they require a specific license to operate. Moreover, South Korea wants to regulate those who offer systems to create and issue digital currencies. A very interesting category to keep an eye on, that much is evident.
Another side effect of this proposal is how some business model will soon be illegal. Anyone running an MLM scheme, for example, will face a very tough time. Additionally, market manipulation and money laundering can result in severe prison sentences. It is evident more regions need to outlaw shady business models involving Bitcoin and other currencies. Especially companies claiming to be involved in cryptocurrency but without proof to back it up. Those are not hard to find by any means.
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