The South Korean government is considering introducing an approval system for cryptocurrency exchanges based on the Bitlicense model, developed by the New York State Department of Financial Services.
The South Korean regulators are considering introducing an approval system for cryptocurrency exchanges, Business Korea reported. An official participating in the government’s virtual currency task force, which has been discussing the matter, revealed on Monday:
We are positively considering the adoption of an exchange approval system as the additional regulation on cryptocurrencies. We are most likely to benchmark the model of the State of New York that gives a selective permission.
The State of New York allows exchanges to trade cryptocurrencies only when they have obtained a charter or a license, known as Bitlicense, from the New York State Department of Financial Services (NYSDFS). Its restrictive controls and capital requirements have led to only 6 firms being approved so far. Circle Internet Financial, XRP II, Coinbase Inc, and Bitflyer USA have received Bitlicenses, while charters were granted to Gemini Trust Company and Itbit Trust Company.
“When the country accepts the model from New York, it will be able to bring cryptocurrencies into the institutional system as well as supervise the market in an orderly manner, according to the government,” the news outlet conveyed. While emphasizing that the final decision will likely be made after local elections in June, the publication asserted:
The Ministry of Strategy and Finance is aggressively planning to adopt the exchange approval systems.
At the end of January, the NYDFS requested cryptocurrency trading data from the South Korean regulators after two agencies conducted inspections of 6 major South Korean banks.
No Need for Extreme Measures
The South Korean government began announcing regulatory measures for cryptocurrencies in the middle of December. On December 15, bitcoin was trading at over 20.2 million won (~USD$18,500), according to data from one of the country’s largest cryptocurrency exchanges by volume, Bithumb.
In an effort to curb speculation, the Korean government considered extreme measures including an outright ban of crypto trading and closing down crypto exchanges.
With the price of bitcoin at approximately 9,747,000 won (~$8,967) at the time of this writing, the Korean regulators believe that “there is no need to use a hard-line policy, including a total ban on trading, as the speculation has subdued,” the news outlet noted.
Furthermore, the country’s prime minister confirmed last week at a National Assembly meeting that closing down cryptocurrency exchanges is “not a serious consideration.” Deputy Prime Minister and Minister of Strategy and Finance Kim Do-yeon also recently proclaimed:
We don’t need to get rid of or suppress digital currencies.