There is a growing voice that it is necessary to enact the business rights law that deals with the entire cryptocurrency (virtual real estate) industry, centering on the blockchain industry. It is pointed out that while advanced financial countries such as the United States are looking at cryptocurrency as a complementary material to innovate the existing financial industry and bringing it into the institutional sphere, the Korean government is still stuck in the regulatory frame and is missing opportunities for industrial growth.
On the 19th, the Korea Blockchain Association held the first round of discussions on the Virtual Asset Business Rights Act Task Force (TF) for the Promotion of the Blockchain Industry and Consumer Protection, and collected opinions from experts.
The conference was held on this day as a place to examine the trends of the US cryptocurrency system and financial institutions and to check the domestic situation.
The U.S. applies reasonable regulations to allow cryptocurrency to be handled in the financial industry. Accordingly, various cryptocurrency-based financial services such as ▲Cryptocurrency Custody ▲Bitcoin ETF ▲Cryptocurrency Futures trading have emerged and are growing a new market.
First, the US allows cryptocurrency custody (trust) to all banks in the country. In July of last year, the Monetary Supervisory Service (OCC), a bank regulatory agency under the Ministry of Finance, interpreted “Cryptocurrency custudy is an extension of the bank’s trust function to digital activities.” Released a confirmation letter stating that “the cryptocurrency custodial business is possible”.
Not only banks, but also companies specializing in cryptocurrency such as Bitgo and Coinbase are providing cryptocurrency custodial services for institutions while complying with regulations by obtaining permission from the state trust business. Furthermore, Anchorage, a cryptocurrency custodial company, became the first federal cryptocurrency bank with conditional approval of state law bank accreditation from OCC.
However, in Korea, it is difficult for banks to directly service cryptocurrency custody. At the meeting on the day, Seo-hee Han, attorney at Law Firm Barun explained, “In Korea, it is still blocked to conduct virtual asset business at the same time in financial companies due to regulations under the Banking Act or the Capital Markets Act.”
“The US has made it possible for trust companies to trust digital assets while interpreting the existing regulations more flexibly,” he suggested. “Korea needs to think about how to pursue innovation within the regulation, too.”
In the U.S., cryptocurrency fund sales and bitcoin futures transactions are supported by the institution. These products also serve as infrastructure that allows institutional investors to participate in the cryptocurrency investment market.
The current operating scale of the representative cryptocurrency fund’Grayscale Bitcoin Trust’ has grown to reach 23.5 billion dollars.
The Chicago Futures Exchange (CME) opened the Bitcoin futures market in December 2017, and plans to open the Ethereum futures market in February of this year.
On the other hand, it is impossible to launch a bitcoin fund product in Korea. Pacific Lawyer Park Jong-baek explained, “To operate a bitcoin fund, custudy, trustees, collective investment companies, investment brokerages, etc. are required. Currently, domestic financial companies are blocked from doing such business with cryptocurrency.”
Cryptocurrency derivatives trading is also blocked. Attorney Yoon Jong-soo said, “Currently, the Financial Services Commission believes that bitcoin is not an underlying asset.”
On the day, experts pointed out that the domestic regulatory environment still makes it difficult for companies to promote their cryptocurrency business. In Korea last year, the Special Financial Information Act (Special Law), which imposed the obligation to prevent money laundering on cryptocurrency businesses, was passed, and a 20% tax was decided on the profit of cryptocurrency transactions, which took the first step in the legislation of the cryptocurrency industry.
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However, it is still a difficult environment for blockchain companies to stably conduct business. Both the Special Money Act and the cryptocurrency taxation are regulatory laws that require certain obligations to be fulfilled, and the basic regulations necessary for the entire industry, such as issuing, providing, trading, and protecting investors, are still not legislated.
Kap-soo Oh, chairman of the Korea Blockchain Association, at a meeting on the day, “The policy change of the US financial authorities is predicting that digital assets and financial services will be combined to develop in various forms. In order for Korea to develop into a leading country in the world He emphasized that blockchain technology should be able to be usefully utilized in various fields such as economy, society, and culture, and desirable business rights laws should be prepared for this.”