South Korea’s Financial Supervisory Service (FSS) has clarified that it has no plans to regulate Bitcoin trading, owing to the fact that Bitcoin is not legally recognized as a currency in South Korea.
Speaking to reporters on Thursday, Choe Heung-sik, chief of the FSS, said:
“Though we are monitoring the practice of cryptocurrency trading, we don't have plans right now to directly supervise exchanges. Supervision will come only after the legal recognition of digital tokens as a legitimate currency.”
Choe, who has been serving as head of the FSS since September this year, further explained that the South Korean government’s stance on Bitcoin is that the digital tokens are used in speculation, and not as payment tools. Thus, the FSS does not see Bitcoin falling under the category of financial products, or Bitcoin trading being classified as a financial service.
Likening Bitcoin trading to gambling, Choe explained that while there was the risk of things going awry in both cases, there were no grounds for the FSS to control either of these practices.
The South Korean government’s position on cryptocurrencies has fluctuated from indifferent (earlier this year Bank of Korea governor Lee Ju-yeol dismissed the possibility of recognizing digital currencies as legal fiat) to outright hostile (the FSS has banned Initial Coin Offerings in the country).
The latest statement from FSS may have been prompted by the concerns surrounding Bitcoin trading after the recent Bithumb server outage.
One of the largest Bitcoin exchanges in the world, South Korea’s Bithumb caused widespread panic when its server went down on November 12, in the midst of Bitcoin Cash’s surge from $350 to a record $2,400. The server outage left customers unable to take advantage of the price hike, and resulted in the loss of billions of won.
Since then, a class-action lawsuit has been filed against Bithumb by approximately 3,000 plaintiffs, with Bithumb apologizing for the losses and assuring users that it is considering how to pay them back. At the time, concerns arose regarding the lack of regulation for cryptocurrencies in the country, and an official of South Korea’s Financial Supervisory Commission was quoted as saying:
“Virtual currency is not financial money nor financial investment products at present. The government says you should do it at your own risk, even if you do not recommend the transaction.”