Governor of the Financial Supervisory Service (FSS), Choe Heung-sik, said that the watchdog is not considering digital tokens, such as Bitcoin, as legitimate currency. Due to this, they have announced that they have no plans to supervise the transactions of the Cryptocurrency.
The FSS does not recognise cryptocurrency trading as financial products or service. This is down to the government stating that digital tokens are still a subject of speculation, and they do not believe that they can function as a payment tool.
Choe said ‘’ It is the same with the fact that we don’t regulate or supervise casinos,” during a meeting with reporters. “Though there could be concerns on excessive gambling, that does not provide grounds for the FSS to control casino practices.”
“Though we are monitoring the practice of cryptocurrency trading, we don’t have plans right now to directly supervise exchanges. Supervision will come only after the legal recognition of digital tokens as a legitimate currency.”
There have been rising concerns over digital token trading after the server of Bithumb, which is one of the largest exchanges in the world operating in Korea, went down earlier this month.
Whilst the malfunction occurred, many investors claimed that they have suffered up to hundreds of millions in losses. The exchange is currently still calculating the exact amount of losses during that time.
Since the outage, more than 6,000 people have subscribed to an internet forum preparing for a suit against Bithumb, and more than 1,500 having actually joined a joint suit against the company.
Calls have been growing that Cryptocurrency exchanged should be regulated better, given that the daily average of digital token trading has reached 2 trillion won, equivalent to $1.4 billion. A digital currency statistics provider, Coinhills, has said that Korea’s won is the third most traded national currency, behind Japanese Yen and the U.S. Dollar.
Japan-based company, Bitpoint, has opened a branch in Korea earlier this month. Their services will begin next week. Two China-based companies, OKCoin and Huobi are also preparing to begin service in Korea. Japan, unlike Korea, has tough regulations on exchanges as well as levying taxes on transactions.