After two full years of discussion and deliberating, the government of South Korea has finally passed legislation that fully integrates virtual currencies into the country’s economy.
The National Assembly passed an amendment to the Act on Reporting and Use of Specific Financial Information bill on Thursday, which legalizes the possession and trading of cryptocurrencies.
Crypto now fully legal
The legislation is slated to go into effect in September 2021. The president of South Korea, Jaein Moon, is expected to sign it soon, which ensures it will go into effect a year later with a six-month grace period.
The key feature of this new legislation is that exchanges, ICOs, wallet companies, and trusts will have to follow the stringent new reporting requirements. Such requirements entail that they have in place a real-name verification partnership with an approved South Korean bank. An account holder must use the approved banks to add or withdraw any fiat from a cryptocurrency exchange.
The reason for such requirements is to curtail any potential money laundering or terrorist support via cryptocurrency. Another requirement in the new legislation is that companies must have an information security management system (ISMS) certification, which is given out by the Korean Internet Security Agency (KISA).
Mixed reaction in South Korea
This new development was met with both positive and negative reactions.
There are many who applaud the new official status of the cryptocurrency ecosystem into the country’s economy. The additional requirements are seen by many as being very beneficial in cutting down potential scams in the industry.
Another good news coming from #southkorea. From now on, #digitalassets are entirely legal in the nation. A foundation has been created to wash away the stigma of cryptocurrency. South Korean parliament passes #Landmark crypto bill.
— Aman Sanduja (@AmanSanduja) March 5, 2020
However, there are those who view the legislation in a negative light. It is noted that it is very expensive to gain ISMS certification and that only six exchanges currently have it. Also, only four exchanges have partnerships with approved banks.
The need to comply with the new requirements could potentially lead to higher fees due to the higher costs of operation. Naysayers believe that when the full effect of the legislation begins, crypto holders in South Korea may only have a handful of exchanges to choose from instead of the more than 70 exchanges that existed late last year.
Another lament by those opposed to the new legislation is that taxes will now have to be paid on their trades.
Crypto legalization might ease COVID-19 fears
One benefit of South Korea legalizing cryptocurrency is that it may help allay the alarm over the novel coronavirus (COVID-19) outbreak.
Wow big wins for #crypto two days in a row!! ????
First #India now #SouthKorea. Banks are outdated, coronavirus doesn’t care where you work or who you are. To be better prepared against deadly pandemics, secure P2P cashless payments are a must as example.https://t.co/1908JTvevo
— Adel (@AdeldMeyer) March 5, 2020
As the virus can live on surfaces for some time, China has taken to literally cleaning its own fiat to help fight the spread of the virus. One bank, the Guangzhou branch of the People’s Bank of China, announced last month that it was destroying all used banknotes from buses, hospitals, and wet markets.
With cryptocurrency, such concerns do not exist.
South Korea has the second most number of coronavirus cases in the world – 6,284 (trailing China’s 80,552 cases). So far, 40 people in South Korea have died from the virus, coming in fourth behind China (3,042), Italy (148), and Iran (108).