The Korean Bar Association (KBA) is urging the South Korean government to quickly establish a legal framework to help develop the local crypto industry and protect investors.
In a news conference at the Korean parliament, the KBA, which is comprised of 23,557 attorneys and 1,353 law firms, has appealed to the government to promptly institute measures to help settle the blockchain and crypto business in South Korea. It said that the current, long-extended inaction only hampers development of the financial industry, while more fall victim to crypto-related fraud due to a lack of credible information.
“We urge the government to break away from negative perceptions and hesitation, and draw up bills to help develop the blockchain industry and prevent side effects involving cryptocurrencies,” said KBA President Kim Hyun.
The South Korean government recently announced that it would decide its position on blockchain regulation only after a thorough study is complete. The Financial Supervisory Service (FSC) has been conducting surveys among local blockchain startups since September to gather their views on the current legal framework.
Jung Ho-seok, head of the KBA blockchain taskforce, said that not taking any action will only result in greater failure in the future.
“The government has yet to come up with any tangible measures primarily out of fear of unwanted byproducts based on excessive and inept government intervention,” Ho-seok.
The KBA said the government should issue detailed guidelines concerning cryptocurrency exchanges including minimum requirements for those who seek to run exchanges, a ban on insider trading and preventative measures to protect exchange users. It also called for the government to work with other countries on an institutional framework for crytocurrencies.
“Japan, Estonia and Malta have nearly concluded establishing relevant legal frameworks, while similar efforts are ongoing in France, Russia and Gibraltar,” the KBA said. “The US, Singapore and Switzerland have yet to legislate the business, but financial regulators there have issued guidelines as part of broader efforts to regulate the industry.”
In September 2017, FSC banned all initial coin offering (ICO) activities in the country to curb speculative investment in cryptocurrencies, such as bitcoin. However, it still allows local investors to put money into foreign ICOs and crypto exchanges operating within the country.
The KBA said that rather than imposing an outright ban, the government should allow competent certified entities to pursue the collective investment scheme in various equity securities where they can make strategic moves.
“The government can regulate securitized tokens with the existing laws on securities,” the association said. “In order to prevent possible losses to Koreans who took part in foreign entities-led ICOs, the government should require foreign entities to submit a paper prior to the procedure. Trade and remittance of cryptocurrencies between Korea and overseas countries should be allowed.”
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