Within hours of launching the bitcoin futures to the financial market (December 10 and 20 respectively), the South Korean Financial Services Commission (FSC) issued an order banning the trading of bitcoin futures contracts in the country. According to multiple reports, the regulator does not recognize cryptocurrency as an underlying asset of derivative products, so it can not be subject to futures trading.
The request, sent through the Korean Financial Investment Association (KOFIA) this week, comes ahead of multiple Korean securities firms that are preparing to launch derivative products to customers. As a result, the securities companies eBest Investment & Securities and Shinhan Financial Investment canceled their seminars for bitcoin futures investors.
According to an unnamed official in the securities industry, it is the first time that South Korean authorities prohibit trade in a specific item.
“It seems that they made that decision worrying if it gets out of control, since they have not taken a position on the cryptocurrency,” said the industry official.
In September, the FSC banned all fundraising campaigns in the country through initial currency offers (ICO). The FSC declared at that time that such negotiation is a “violation of the law of the capital market” and will begin an “intensive campaign”. The regulator also said it would begin on-site inspections of cryptocurrency companies and look for customer data dating to December of last year.
However, the Financial Services Commission of South Korea (FSC) plans to introduce regulations for Bitcoin and other digital currencies, as well as to lift the general prohibition of initial currency offers (ICO) in the country. The plans were revealed by a senior official of the agency on December 6, 2017.
In his statement at a public hearing of the National Assembly to address a proposal for legislation to create a legal framework on cryptocurrencies, FSC Vice President Kim Yong-beom confirmed the commission’s plan to regulate the local currency market in order to avoid activities such as money laundering and tax evasion.
He also said that the agency is closely monitoring developments in the virtual currency trading markets and is prepared to impose stricter measures if necessary.
“The government does not consider cryptocurrencies as money or financial products, we will regulate Bitcoins to reduce money laundering and tax fraud.”
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