In the aftermath of a meeting with International Monetary Fund (IMF), officials from South Korea are trying to bring along structural reforms in the field of strengthening the supervision and management of Bitcoin empowered digital currency transactions. According to a report published by Sedaily, IMF has called for increased regulatory reform and labour productivity in countries including South Korea. The 36th meeting of International Monetary and Financial Committee (IMFC) held on 14th October in Washington, D.C. discussed this issue in detail.
The requirement of bringing in regulations in the sphere of financial technologies was pointed out in this highest-level meeting of the IMF’s member countries. The publication quoted the IMFC as stating:
“In the case of fintech and digital currency, there is a need to maintain a competitive financial market and to establish a fair competition system that can prevent winners from taking over.”
Kim Dong-yeon, the Minister of Strategy and Finance Deputy Prime Minister of South Korea graced the meeting and stated that:
“We must actively push for structural reforms to achieve growth.” The Sunday Seoul Newspaper also quoted him on Friday saying that, “We will strengthen the management and supervision of virtual currency transactions such as bitcoin. The virtual money is a new field and it is expanding as a new field, but we are worried about the investment damage because there is no regulation. I’ll see if there is anything we can do.”
According to a report of Inews24, Kim also added that he wishes to undertake an active role in “reviewing the role of virtual currencies such as bitcoin. currently, the finance committee is preparing countermeasures against virtual money at the level of the government, and it should be dealt with as an axis of the economy in the financial sector.”
The government officials of Korea are undertaking discussions regarding the methods of regulating cryptocurrencies. A task force was set up in July for determining a regulatory framework for the cryptocurrency sector. However the number of hurdles faced by the task force was plentiful given legal confusions surrounding the classification of cryptocurrency as asset, money or security.
Cha Hyeon-jin, the head of the payment and settlement systems department at the Bank of Korea stated during an interview in September that “virtual currency is not a monetary or financial product.” He added that, “Virtual currency traders are reporting to the Fair Trade Commission and local governments as e-commerce traders, and actual bitcoins are being traded as commodities.”
The Financial Services Commission (FSC) has made of announcement of its plans of dealing with digital currencies like Bitcoin and Ethereum. They have also urged banks to report suspicious transactions and intensify the verification process. Following Financial Serv ices Commission’s announcement, Korea Communications Commission, ICT and the Ministry of Science started spreading word that they shall conduct on-site inspections of various cryptocurrency service providers along with the Bitcoin exchange platform wherein they operate.
The issue of taxation also looms over the horizon like a dark cloud which needs to be cleared for the procession to continue. Commissioner of the country’s National Tax Service, Han Seung-hee addressed lawmakers regarding the best way to tackle the taxability of cryptocurrencies along with areas of VAT, gift tax and capital gains. September marked the ban imposition by Financial Servies Commission on all ICO activities in South Korea.
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