The South Korean financial regulator Financial Supervisory Service (FSS) has claimed that it has no plans at present to regulate the trading of digital currencies such as Bitcoin, beyond “rules announced last week”. The watchdog based its decision on the fact that it does not consider digital currencies to be a substitute for money, as they are not legal tender in the country.
During a press conference on the issue, FSS Governor Choe Heung-sik claimed that the only role the regulator should play in the digital currency space is warning the public about potential risks:
“All we can do is to warn people as we don’t see virtual currencies as actual types of currency, meaning that we cannot step up regulation for now.”
He also added that the introduction of any cryptocurrency regulation in the country will only promote digital currency trading, as investors will think that the watchdog already recognizes cryptocurrency as “actual” currency.
The remarks of the governor are similar to his previous statements. In November 2017, he announced that the FSS will not directly supervise the operations and activities of digital currency exchanges since the virtual currencies being traded are not legal tender in the country.
Given its position, the government was content issuing several rules, rather than establishing regulations, to oversee the local Bitcoin and digital currency industry.
In the past, major exchanges in the country braced themselves and were ready to undergo all sorts of regulatory and compliance steps should financial regulators in the country decide to take action.
Apart from a number of rules that were already issued, the National Tax Service (NTS) is currently drafting a framework on how to effectively collect taxes on cryptocurrency trading transactions.
The NTS will most likely introduce capital gains taxes on companies and individuals who trade digital currencies.