The Governor of central bank of South Korea; Bank of Korea, Lee Joo-yeol has revealed plans to regulate Bitcoin as a commodity. He also stated that the regulation will not be launched by the central bank soon.
According to Lee, digital currencies like Bitcoin cannot be considered as money based on the definition of the Bank of International Settlements (BIS). During the audit of BOK, he stated that,
“It is difficult to look at [virtual currencies] as money by [the definition] of Bank of International Settlements (BIS). Regulation of virtual currencies is appropriate because it is regarded as a commodity. It cannot be regulated at the level of a currency.”
South Korea’s latest actions on virtual currencies
A digital currency task force was appointed by the South Korean government in 2016 to study the regulatory and licensing parameters for Bitcoin and Bitcoin exchanges in order to solve the issue regarding crytocurrencies. But according to a CNN report, the team failed in analyzing on whether cryptocurrencies should be included in systems right now and how the systems work if they are included.
The Financial Supervisory Service (FSS), financial regulator of South Korea announced a ban on ICO guided by the task force to protect investors from the increasing risk of fraud. FSS vice chairman Kim Yong-bum quoted that,
“We are worried about adverse effects such as increased risk of fraud; the ICO will be prohibited in all forms.”
This has caused concern in the digital currency trading market as it resembles the crackdown issued in China.