South Korea Won’t Regulate Bitcoin, Not Until it Becomes a Legal Currency

South Korea’s financial regulator and watchdog has no intention of regulating bitcoin trading or supervising bitcoin exchanges, a local report has confirmed.

Speaking to reporters on Thursday, South Korea’s Financial Supervisory Service (FSS) chief Chloe Heung-sik revealed bitcoin isn’t deemed a “legitimate currency” in the country and, as a result, will not be supervised not regulated by the authority.

According to a Korea Times report, Choe said the government does not classify digital currencies or tokens as payment instruments and see them as ‘subjects of speculation’ instead. The lack of any clear recognition of cryptocurrency trading negates it from being regulated as a financial product or service, the official said.

Choe stated:

Though we are monitoring the practice of cryptocurrency trading, we don’t have plans right now to directly supervise exchanges. Supervision will only come after the legal recognition of digital tokens as a legitimate currency.

The head of the watchdog went on to compare cryptocurrency trading with casinos, a space that is neither regulated nor supervised by the authority. “Though there could be concerns on excessive gambling, that does not provide grounds for the FSS to control casino practices.”

The remarks come within weeks of customer concerns at Seoul-based Bithumb, the world’s largest cryptocurrency exchange by trading volume, suffering an outage caused by a server failure earlier this month. Disgruntled customers have since taken to pushing for a class action lawsuit against the exchange. In a separate incident, Bithumb suffered a data breach which saw customer losses in the “hundreds of millions” of won alongside the theft of personal data belonging to an estimated 31,000 users, all in a year that has seen South Korea firmly established among the world’s largest cryptocurrency trading markets.

The watchdog’s official stance will bring respite to cryptocurrency adopters in the country amid fears of Seoul clamping down on trading in the country by following China’s example. Indeed, the FSS moved to ban initial coin offerings (ICOs) in September, within weeks of China’s blanket ban.

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