Mixed Reactions About South Korea’s New Law

This past Thursday, the South Korean legislature passed a landmark amendment to a bill that makes trading, holding, and running a business that transacts with cryptocurrency legal. The announcement itself came with a huge fanfare of applause and media attention as it was made only shortly after the Indian Supreme Court made a similar move there.

The new amendment gives clear legal definitions to what is a virtual currency and what are virtual currency operators. It also lays out requirements for operating a virtual currency company which operators will have about a year and half to be in full compliance with after a year of processing the law and a subsequent 6-month grace period. Some of the cryptocurrency exchanges in Korea are already in compliance, while others will have to catch up. Furthermore, it is expected that many of the now-defined operators in this space will be pushed out on legal grounds for their inability to comply with the new law.

As expected, the international cryptocurrency and blockchain communities rejoiced at the series of good omens for the future of the widespread adoption of the technology. The domestic Korean responses to the news, however, ranged widely from relieved to neutral, all the way to pessimistic and cynical.

The positive reactions came from the most expected sources: those working directly with the legislature to get this amendment passed. The Korea Blockchain Association (KBA) chairman Gapsoo Oh proclaimed “[We will do our best to contribute to the national economy by creating jobs to develop the virtual currency and blockchain markets.]” KBA had many months ago approved of the provisions made in the amendment in a session with National Assembly, Korea’s legislature.

The KBA said further that they would be in contact with financial institutions who are essential in implementing the real-name bank account service. That service will be one of the most important requirements virtual asset operators must be in line with by the time the law comes into full effect.

Hanbitco CEO Sunga Kim had a very positive outlook for the new law. She was reportedly instrumental in developing the measures that are outlined in the new amendment and was understandably smitten with the unanimous result in National Assembly. She commented, “A foundation has been created to wash away the stigma of cryptocurrency exchanges, fraud, and debauchery and establish itself as a transparent and reliable industry. It will lead the development of the industry with the inflow of new capital.”

Junhaeng Lee from GoPax, another Korean exchange expressed his positive attitude as well but noted a an amount of relief that the political battle is over for now. “[I think it’s a good thing that this necessary law has been passed. I hope that people can view the industry now not in terms of its political pros and cons.]”

There were those in the industry who expressed some uncertainty or even plainly negative feelings on the new law. Many of those in neutral or opposition standings on the law gave pointed opinions on the matter that have been mostly kept silent on social media to date while the international community revels in the boon the week has been for Bitcoin.

Judge Jungyeop Lee from the Uijeongbu District Court said, “[We believe that the basic laws for fostering the blockchain industry ecosystem are in place, but there are many voices concerned that low or no-income startups will disappear.]” He expressed some anxiousness that the tech startup community will actually suffer in the long term from the new law due to the tremendous financial burden to acquire and maintain the security measures now required of virtual currency operators.

Doo Wan Nam, Business Development for Asia Pacific at MakerDAO states bluntly that “it’s too early to tell how it will apply.” Such a view on things is echoed by the more silent among investors and industry insiders who know that with all major shifts come considerable growing pangs. This new law will certainly usher in a period of growth that will be hard to adjust to for many.

An attorney in Korea noted that the legislation requiring real name accounts is too stringent. He said, “[If this bill is mismanaged, I think it will be just a domestic industrial regulation rather than an anti-money laundering measure.]”

Some day traders in Korea ranging on the cynical side had choice words immediately following the announcement of the amendment’s passing. One pointed out that taxes are sure to follow, which is not doubtful in the slightest since the appropriate ministries in the Korean government have already expressed concerted interest in refining tax law to include cryptocurrency earnings. Currently there is debate as to whether there should be capital gains or per-transaction taxes attributed to virtual currency operators.

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