South Korea’s Crypto Regulation Shakeup: New Bureau, Agreement With China
South Korea’s top financial regulator is planning a major organizational restructuring that includes introducing some new crypto policy initiatives. A bureau dedicated to financial innovations that include cryptocurrencies is being set up. In addition, an agreement with Chinese authorities relating to crypto and initial coin offerings has also been reached. Meanwhile, the contracts between Korean crypto exchanges and banks for real-name accounts will expire this month.
Major Organizational Restructuring
FSC Chairman Choi Jong-ku.
Last week South Korea’s top financial regulator, the Financial Services Commission (FSC), said it will undergo a “major organizational restructuring.” As part of the plans, it “will establish a department exclusively for policymaking initiatives in the nation’s blockchain industry,” the Korea Times described.
The new department, called the Financial Innovation Bureau, will have a two-year lifespan. Its establishment is part of the FSC’s “restructuring plan to lead financial innovation in the coming Fourth Industrial Revolution era,” the news outlet explained, adding that “it will help nurture Korea’s fintech industry, mostly covering the nation’s cryptocurrencies and blockchain technology.”
Citing that the Commission is planning “a major organizational reshuffle to better protect financial consumers,” an FSC official elaborated:
The new Financial Innovation Bureau will also be tasked with policy initiatives for financial innovation, such as innovating financial services using fintech or big data, and responses to new developments and challenges such as cryptocurrencies.
Agreement with China
Chosun reported last week that First Senior Deputy Governor of South Korea’s Financial Supervisory Service (FSS), Yoo Kwang-yeol, recently met with the Deputy Chairman of the Insurance Supervision and Management Committee of the Bank of China. They agreed to integrate the Financial Supervisory Cooperation Agreement.
The initiative between the two countries began as the FSS reviewed the process of establishing foreign branches for Korean insurance companies in China. “The two organizations have decided to expand their monitoring experience and information exchange on internal control of financial institutions and anti-money laundering,” the publication details, adding:
In a meeting with the China Securities Regulatory Commission, a cooperative channel was set up, including the establishment of a working-level hotline … it will jointly respond to new emerging global supervisory and regulatory issues such as international financial regulation, virtual currency, ICO [initial coin offering] and fintech.
This was not the first time the two governments discussed collaborating on crypto measures; earlier this year news.Bitcoin.com reported that the South Korean regulators were seeking to collaborate with China and Japan. In February, the country’s Minister of Strategy and Finance, Kim Dong-yeon, met with the governor of the People’s Bank of China to discuss economic issues of both countries as well as cryptocurrency policies.
Tax Benefits for Blockchain Companies
At the meeting of the ministers on economic policies, the government decided on a plan to revitalize the country’s investment incentive system, the Korea Times reported this week. Blockchain was added to the list of emerging technologies eligible for tax benefits. “In order to alleviate the investment burden of companies that use new technology,” the publication explained that the government has decided to “apply the tax benefits to blockchain” technology, noting:
Blockchain-based information security technology, quantum computing (advanced computer technology that operates on the principle of quantum mechanics), and commercialization facilities to the range of new growth technologies [are] to be subject to tax exemption under the Tax Exemption Restriction Act (157 technologies in 11 existing sectors).
Real-Name Account Contracts Expiring
The South Korean government implemented the real-name system for cryptocurrency trading accounts at the end of January. According to Money Today, the contracts between crypto exchanges and commercial banks for the issuance of real-name accounts must be renewed “every six months to encourage virtual currency trading sites to continue their anti-money laundering efforts.” Existing contracts will expire at the end of this month.
So far, only the country’s four biggest crypto exchanges have real-name account contracts. While Upbit, Bithumb, Coinone, and Korbit can issue real-name accounts for their customers, other exchanges continue to use corporate accounts. In addition, only three banks currently offer real-name account services despite six of them having the capability to do so. The publication elaborated:
Currently, Bithumb has contracts with Shinhan Bank and Nonghyup Bank. Upbit is with IBK, Coinone with Nonghyup Bank, and Korbit with Shinhan Bank.
At the time of contract renewals, Coinplug may become the fifth trading platform to have a real-name contract with a bank, the news outlet detailed, citing that the company “has been in talks with Shinhan Bank since the beginning of this year.”