Korean Presidential Committee Pushes to Make Cryptocurrency Mainstream
January 8th, 2020
A South Korean committee directly under the president has recommended several measures to the government that will make cryptocurrency mainstream. Emphasizing that “it is no longer possible to stop crypto asset trade,” the committee recommends integrating crypto into the country’s financial system, allowing financial institutions to directly offer a range of crypto products, including derivatives, listing bitcoin on the country’s stock exchange, and more.
Presidential Committee Pushes for Pro-Crypto Measures
The South Korean Presidential Committee on the Fourth Industrial Revolution, directly under the president, has proposed a number of pro-crypto measures to the government. The committee urges the government to integrate cryptocurrency into the country’s financial system, thus allowing financial institutions to directly handle and offer a wide range of crypto-focused products. The proposals are outlined in a document the committee recently published.
Among the recommendations are allowing financial institutions to offer their own crypto-related products, such as bitcoin derivatives, “as a medium- and long-term strategy for the institutionalization of cryptocurrencies,” Business Korea reported on Jan. 6, elaborating:
The commission advised the Korean government to allow financial companies to release futures products based on bitcoin prices, as the U.S. financial authorities did.
Besides launching bitcoin derivatives in South Korea, the presidential committee suggested listing bitcoin directly on Korea Exchange (KRX), the sole securities exchange operator in the country.
The U.S. Commodity Futures Trading Commission (CFTC) has approved several crypto derivatives products. The CME Group has been offering BTC futures and is scheduled to offer options on BTC futures on Jan. 13. Bakkt, a digital asset platform powered by Intercontinental Exchange Inc. (ICE), the parent company of the New York Stock Exchange (NYSE), began offering physically-settled bitcoin futures in September 2019. In December, the platform launched an option on bitcoin futures. In the same month, another regulated platform, Erisx, launched its physically-settled bitcoin futures. Ledgerx is another regulated platform that has been offering bitcoin options trading.
The presidential committee further advised the government to introduce business licenses or guidelines for crypto exchanges, citing initiatives by the financial authorities in the U.S. and Switzerland. To avoid relying on foreign custodians in the process of handling crypto assets, the committee was quoted as saying:
Participants in the traditional capital market such as securities firms and banks should develop and introduce domestic custody solutions to handle crypto assets so that the Korean crypto-asset custody market will not depend on foreign countries.
“The Korean government has to gradually allow institutional investors to deal in crypto-assets and promote over the counter (OTC) desks dedicated to institutional investors’ trade,” the committee continued. In addition, the committee proposes unifying different crypto-related terms such as cryptocurrencies and virtual currencies into crypto assets. Business Korea conveyed:
As of May 2019, daily crypto-asset trade hit more than 80 trillion won (about US$69 billion) in the world, so it is no longer possible to stop crypto asset trade.
Prior to releasing the aforementioned document, the committee had urged the government to quickly establish the legal status of cryptocurrency in order to proceed with tax and accounting measures. In October 2019, the committee said that the government’s current policy of focusing on curbing crypto speculation has reduced the country’s global competitiveness in the blockchain and crypto areas. The legal status of cryptocurrency is needed to amend the country’s tax law, the Ministry of Economy and Finance clarified last week. Until the tax law is amended, crypto profits are not taxable in South Korea, the ministry confirmed.