It was only a matter of time before The Bank of Korea, the central bank of South Korea weighed in on the escalating cryptocurrency regulation saga.
With Japan enforcing, fair, but strict regulations on cryptocurrency exchanges, India going on a bit of a banning spree and China coming out as a bit on the fence, South Korea seem to be adopting a more-subtle approach to cryptocurrency regulation, referring to ‘guidelines’ rather than specific rules. This approach may also see a Bank of Korea issued cryptocurrency join the circulation before the end of 2018.
According to Kim Yoo-chul of the Korea Times:
“The Bank of Korea (BOK) plans to announce guidelines on cryptocurrencies including a plan to possibly issue a central bank digital currency (CBDC) within the first half of this year. The BOK said it was premature to talk on whether it would issue the CBDC, but the central bank will keep an eye on any global developments.”
In the report, Yoo-chul highlights that the Bank of Korea are already working on the CBDC currency, with research taking place in the wake of the January cryptocurrency boom. As it stands, they are currently focusing their efforts on analysing how a central cryptocurrency might influence the countries financial sector.
In terms of the Bank of Korea’s guidelines, they have already established an identification system which is enforced by the countries major banks. Therefore, before traders and investors are allowed to buy/sell cryptocurrencies, they have to identify themselves and pass a set of identity checks.
According to Yoo-chul:
“Only customers who pass identification checking procedures are allowed to buy and sell cryptocurrencies on platforms operated by major local banks. But financial regulators were given a “free pass” to check and monitor transactions by investors in order to prevent illegal activity. The number of daily transactions in Korea, once regarded as the most active market in cryptocurrency trading, plummeted after the government applied these rules.”
As it stands, the Korean authorities have not yet made any further announcements with regards to what sort of regulation or guidelines they want to establish. The general consensus however is that they will follow the path set by Japan and clamp down on activities within exchanges, in order to make the industry safer for their people, rather than just establishing an out-right ban.
The introduction of a central cryptocurrency by the Bank of Korea may have some very strange effects, it will at least be very interesting to see how it is rolled out and indeed, it will be interesting to see if such a currency is well adopted by the community, or if it is something people just ignore.
Regardless of this, the Bank of Korea seem to be cracking on, we should expect to hear future developments regarding this story over the coming months.
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