The South Korean government has decided to toughen up against bitcoin and other digital currencies, identifying speculative activities in overheated cryptocurrency exchanges. The Ministry of Justice will play a leading role to keep the crypto-asset market under surveillance and clamp down criminal activities associated with virtual currency dealings.

The decision was made during an inter-agency meeting held on Monday where policymakers echoed the cryptocurrency problem has reached a serious level and additional clampdowns are needed immediately.

The justice ministry will replace the Financial Services Commission, the top financial regulator, to lead follow-up meetings on building countermeasures to send a message that the virtual currency exchange will stay excluded from the established financial community.

The decision is another blow to the country’s virtual currency industry after a ban on all forms of cryptocurrency-based money raising activity or initial currency offerings (ICOs). ICOs have become one of the hottest methods of fundraising this year, where startups or established companies raise money by rolling out new digital tokens.

The government also decided to classify cryptocurrency into fundraising with no legal base and revise a rule to allow exchange operators only when they comply with strict regulations such as separate deposit of investors’ money, risk explanation, compliance with money-laundering regulations and prohibition of doorstep selling.

By Lee Seung-yoon and Minu Kim

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]