In response to the recent speculation frenzy over virtual currency trading and increase in virtual currency-related crimes, the Korean government announced emergency measures yesterday, December 13, 2017, the main points of which are summarized below:
- Prohibition on virtual currency trading and opening of virtual currency account (with the bank or the exchange) by minors and foreigners, which will be enforced in cooperation with the banks
- Reinforcement of FX regulations, e.g., transfer of virtual currencies disguised as travel expenses will be subject to strict investigation
- Prohibition of any and all virtual currency transactions (holding, purchasing, taking as security or otherwise investing in virtual currencies) by domestic financial institutions
- Investigation on business activities of virtual currency exchanges. Exchanges with frequent customer information leakage or unfair transactions will be suspended from operation and/or receive fines.
- Possible tax imposition on trading gains (by reference to other jurisdictions).
Also, the emergency measures included the measures announced on September 2 and 31, 2017, e.g., (i) crackdown on crimes involving virtual currencies, e.g., frauds and illegal collection of funds, (ii) the prohibition of ICO (Initial Coin Offering), and (iii) other requirements aimed to increase the security of the exchange and prevent illegal activities, such as KYC/AML procedure and cryptographic key distribution. For more information, please see BKL's 9/25 and 9/29 newsletters.
This update is intended as a summary news report only, and not as advice. For legal advice, please inquire with your contact at Bae, Kim & Lee LLC, or the following authors of this bulletin:
Jae In LEE