South Korea's Bitcoin Regulatory Bill is Released, 500 Million Won Becomes Market Entry Threshold

In South Korea, a law that sets a regulatory framework for digital currencies such as Bitcoin has been introduced by lawmaker Park Yong-jin. The bill defines digital currencies, classifies digital currency operators into five categories, and details specific requirements and prohibited activities.

Bitcoin Regulation Act

Park Yong-jin, a lawmaker from the Democratic Party of Korea, announced last week that he had proposed an amendment to the Electronic Financial Transactions Act. Its main goal is to create a regulatory framework for digital currencies in order to "maintain a healthy market order and protect users." A local media outlet called the amendment the "Bitcoin Regulation Act."

Park said:

The public is increasingly interested in virtual currencies such as Bitcoin and Ethereum, but there is no clear definition of virtual currencies in China, nor are there proper restrictions on the sellers of virtual currencies.

He announced the introduction of this bill back in July. According to reports:

The Bitcoin Regulation Act is expected to be discussed during the regular congressional session in September, and is likely to spark an invigorating debate.

Definition and classification

In this amendment, virtual currency is defined as "a trading tool or an electronic store of value". The bill also distinguishes virtual currency from "real" currency. In addition, it also classifies digital currency operators into five categories:

1. “ Virtual currency traders ” – those who sell goods or services in exchange for digital currency.

2. “ Cryptocurrency dealer ” – a person who sells cryptocurrencies by operating a market, such as an exchange.

3. “ Coin Broker ” – Arranges the sale of digital currency or acts as an intermediary in the sale of digital currency.

4. “ Virtual Currency Issuer ” – provides systems to create and issue digital currencies.

5. “ Virtual currency manager ” – storing or managing digital currency for others.

Requirements and Prohibited Activities

The amendment requires all digital currency operators to "hold funds of 500 million won (about 3 million yuan) or more and be authorized by the Financial Supervisory Commission."

In addition, the bill also requires that user funds must be deposited in another independent institution and purchased with insurance or payment guarantees in order to protect consumer interests.

The bill also prohibits several activities related to digital currencies, such as selling digital currencies through door-to-door sales and pyramid schemes. In addition, illegal activities involving digital currencies such as market price manipulation and money laundering are also prohibited. Violators of the relevant regulations will face a maximum of five years in prison or a fine of 50 million won.