Korea Begins to Establish the Virtual Asset Business Law
On September 22 in Seoul, “The National Assembly Seminar for the Virtual Asset Business Law” was held in the Federation of Korean Industries hall with major commercial banks and members of the National Assembly. They insisted that “the virtual asset business law” is necessary for a huge transformation to digital economy in the post-COVID-19 era and for the development of financial industries. The National Assembly began to work on establishing “virtual asset business law”, following the amendment to the Act on Reporting and Using Specified Financial Transaction Information for regulating money laundering of virtual assets, according to Delio.
The seminar was hosted by Rep. Kim Byeong-wook, the secretary of the National Policy Committee and a lawmaker from the Democratic Party (DP), and Delio, the virtual asset lending company. It was sponsored by Delio’s DeFi project DUCATO.
Kim Tae-nyeon, floor leader of the ruling DP, delivered a congratulatory message to the seminar, saying, “The Democratic Party of Korea and the government are rolling out the Korean New Deal, a national development plan that will transform Korea into a leading nation.” He added, “Building an AI government utilizing blockchain is one of the main pillars of the Korean New Deal.” In addition, Rep. Youn Kwan-suk, the chairman of the National Policy Committee, mentioned that the National Assembly is carefully thinking about how to revise the overall laws for digital finance innovation and that the work on the virtual asset should be done swiftly with lots of social discussions, from defining the industry and the implementing ordinances of the Act on Reporting and Using Specified Financial Transaction Information, in order to promote the industry and protect investors.
Rep. Kim Byeong-wook said in the opening speech that the National Assembly should consider how to establish the law and system for the development of the virtual asset and related industries and for investor protection. He emphasized that the virtual asset has the widest possibilities in the post-COVID-19 era and the related law and system should be established to define the virtual asset as an industry.
Lee Hae-bung, the deputy director of the Financial Supervisory Service, explained major issues of the Act on Reporting and Using Specified Financial Transaction Information which passed the National Assembly last year. He highlighted that the amendment does not allow the virtual asset to enter the institutionalized system. He said that Korea should establish the virtual asset law to clarify a boundary between finance and virtual asset like the U.S. and the U.K.
The commercial banks admitted that they look forward to the legislation of the law on the virtual asset. Jang Hyeon-gi, head of Shinhan Bank’s Digital R&D Center, spoke that a bank can play its role in the area of DeFi with a converged model of blockchain and financial service, adding that Shinhan Bank has already been preparing various services based on blockchain like Virtual Asset Wallet, Custody, Payment, etc. Jo Jin-seok, head of KB Kookmin Bank’s IT Innovation Center, predicted that as all the assets that exist around the world would be digitized quickly, in compliance with this trend, banks would release the “digital asset” management platform. Especially, since the amendment passed the National Assembly last year, Korean banks have a great deal of interest in the custody industry, the virtual asset entrust business.
The virtual asset companies backed up the legislation of the virtual asset business law. Han Seong-hee, the director of Bithumb, pointed out that it is urgent to make the law on the virtual asset and insisted that the virtual asset companies and commercial banks should co-work on a business to earn the trust of the virtual asset and to make the market vitalized. Jung Sang-ho, the CEO of Delio, the virtual asset lending service company, said, “Korean government has never admitted the virtual asset as an industry.” As a voice of the industry, he addressed that it is urgent to create effective laws because the virtual asset has been established in the financial industry by the drastic growth of financial services like lending and deposit using the virtual asset.
Koo Tae-eon, the attorney who’s in charge of the legal revision, said, “First, the regulation that allows the virtual asset should become clear by revising the financial laws. Also, the virtual asset that is not a financial product among various virtual assets should be dealt with outside the regulation.”
Prof. In Ho from Korea University and Prof. Ha Tae-hyeong from the University of Suwon participated in this seminar as academic representatives. Several virtual asset companies joined the seminar to talk about the necessity of the virtual asset business law and related tasks, including Bithumb, Hashed, an investment company, Peertec, a blockchain financial technology company, and Delio, a company specializing in DeFi.
Except for the virtual asset companies, major commercial banks that are traditional financial institutions in Korea and the representatives of the National Assembly agreed to legislation on the virtual asset business law. It is expected that Korea will speed up to establish the laws related to the virtual asset.