By Choi Sun-min
Once there was a boy who learned that there was a dragon living in his house. He told his mother, “Mom, there’s a dragon in the house!” But his mother told him “Son, there’s no such thing as dragons.” Little by little the dragon got bigger and bigger until it took up half of the house. But still the boy’s mother told him again and again, “There’s no such thing as dragons.” Eventually, when the dragon took up the whole house, and the family couldn’t live there anymore, his mother said, “Yes, son, there is such a thing as dragons.” At that moment, the dragon went back to its original size.
When I think about this story, I am always reminded of cryptocurrencies. These have severely disrupted the world’s financial market for more than two years now. Although some bills have been introduced in the National Assembly, there still isn’t a single law regarding cryptocurrencies in Korea. According to current laws, like the dragons in the story, “there’s no such thing as Bitcoin.”
The judiciary’s attitude is similar. Last year, the Supreme Court found that “Bitcoin is an intangible asset of property,” and “Bitcoin holdings can be forfeited.” However, the Supreme Court sidestepped the debate around the legal nature of Bitcoin. Until recently, the Seoul Central District Court ruled that Bitcoin may not be used as a method of purchase, and is mainly used as a speculative method, so it can’t be “an electronic payment means” under the Electronic Financial Transactions Act. According to the legislature and the judiciary, Bitcoin might be a form of property, but isn’t something that can be used legally.
Recently, however, there is some news around the international Financial Action Task Force (FATF) Plenary and its official Recommendations. In June, the FATF said, “the virtual asset service providers (VASPs) should be required to be licensed or registered” (Interpretative Note to Recommendation 15), and “the FATF expects all countries to take prompt action to implement the FATF Recommendations in the context of virtual asset activities and service providers, and the FATF will monitor implementation of the new requirements by countries and service providers and conduct a 12-month review in June 2020” (Public statement on Virtual Assets and Related Providers). Korea is one of the FATF’s 38 members, and it can be expected that the government of Korea will apply the FATF’s Recommendations soon.
One thing that is for sure, is the atmosphere around cryptocurrencies will hardly change, even if Korea adopts a registration or licensing system. But just as in the story “there is such a thing as dragons,” there is such a thing as Bitcoin. Once we admit a thing’s existence, we can see what that thing is. In the case of the law regarding registration or license of VASPs, the new law will define what Bitcoin is. I’m looking forward to the time when we can say “there is such a thing as Bitcoin.” Then, maybe, Bitcoin will go back to its original size.
Choi Sun-min is a junior associate at HMP Law and a member of the Tech & Comms team.