New Bitcoin Regulation Act Introduced, Bans MLMs
A New Bitcoin Regulation Act coming to South Korea
New Legislation stipulating the regulatory framework for digital currencies such as bitcoin, Etherium, Litecoin, and any other altcoin in South Korea has been introduced by lawmaker Park Yong-jin.
The regulation defines digital currency, classified digital currency handlers into five categories, specifies requirements for handlers, and prohibits its use for certain activities.
Park Yong-jin, a Korean Democratic Party lawmaker announced that he has introduced an amendment for the Electronic Financial Transaction Act. He stated that the main purpose of the amendment is to create a regulatory framework for digital currencies in order to “maintain a healthy market order and protect users”. Business Korea calls this amendment the “Bitcoin Regulation Act.”
“As interests in virtual currencies such as bitcoin and ethereum have soared,” Park said “there is no clear definition of virtual currencies or restrictions on those who can sell virtual currencies” Park announced in July that he would introduce this legislation.
According to Business Korea:
The Bitcoin Regulation Act is scheduled for a regular session of the National Assembly in September with a growing debate foreseen.
Here are the Definitions and Classifications in the Proposed Amendment
In this amendment, virtual currency is defined as “an instrument of exchange or an electronic store of value”. It also distinguishes virtual currency from “real” currency. The amendment proposes five classifications of digital currency handlers with the following definitions.
- Virtual currency traders – those selling goods or services in exchange for digital currency.
- Virtual currency dealers – those operating a market for the sale of virtual currencies such as exchanges.
- Virtual currency brokers – those intermediating or arranging the sale of digital currency
- Virtual currency issuers– those offering systems to create and issue digital currencies, and
- Virtual currency managers– those storing or managing digital currencies for others.
Requirements and Prohibited Activities
The revised legislation requires all digital currency handlers to;
- Have 500 million won or more in capital and receive approval from the Financial Supervisory Commission.
- Mandates that customer funds be deposited at a separate institution with insurance, or some form of payment guarantee in order to protect customers.
- Prohibits several specific digital currency-related activities such as their sale and brokering through door-to-door and multi-level marketing MLM schemes.
- Strictly prohibits illegal acts involving digital currencies, such as market price manipulation and money laundering. Violations can carry a prison sentence of up to five years or a fine of up to 50 million won, Business Korea detailed.
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