The South Korean Presidential Committee on the Fourth Industrial Revolution (PCFIR) recommended going to the South Korean presidential office to ask the Korean government to allow financial institutions to launch cryptocurrency-related financial products, such as Bitcoin derivatives. According to PCFIR, this is a medium and long-term strategy to institutionalize cryptocurrencies.
PCFIR has made several recommendations regarding the country’s cryptocurrency regulation
Korea needs to allow financial companies to release Bitcoin derivatives
Digital finance is emerging as a global phenomenon for both the financial sector and the Blockchain industry – cryptocurrencies. And it is likely that because of that reason, the committee recommended that the Korean government allow commercial companies to release future products based on Bitcoin prices, as US financial institutions did. Besides, the committee recommended the financial sector develop and introduce a Korean custody solution to avoid relying solely on foreign custodians in the process of handling crypto assets.
PCFIR emphasized that Bitcoin should be listed directly on the Korea Exchange – the nation’s only securities operator based in Busan. The Commission also recommends that the government consider reviewing business licenses or guidelines for cryptocurrency exchanges and integrating crypto-related products into the medium and long-term financial system.
The commission said:
“As of May 2019, daily crypto-asset trade hit more than 80 trillion won (over $ 68 billion) in the world, so it is no longer possible to stop crypto-asset trade. The Korean government has to intelligently allow institutional Investors to deal with crypto assets and Promote over the counter (OTC) desks dedicated to institutional investors’ trade.”
The Commission also asked the Korean government to allow financial institutions to handle cryptocurrency assets and encourage them to develop Korea’s depository technology.
The report also states:
“Those involved in traditional capital markets such as securities companies and banks should develop and introduce domestic depository solutions to handle cryptocurrency assets to the depository market for electricity assets. South Korea will not depend on foreign countries.”
While South Korean policymakers have called on the government to provide a more comprehensive framework and infrastructure for digital assets, some gaps still exist. The Korean government declares that under current law, it cannot levy income taxes on individual profits from cryptocurrency transactions.
However, this did not prevent the Korean tax authority from imposing a $ 68.9 million (80 billion won) tax bill on the major cryptocurrency exchange Bithumb. The exchange is reported considering administrative litigation to avoid costs.
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