Clearing up confusion

Awash in outcries from investors after the justice minister’s warning that the government plans to shut down cryptocurrency exchanges, the government issued a formal statement that it won’t rush with the plan.

The Office of Government Policy Coordination said that the option of closing down cryptocurrency exchanges will be decided after thorough discussions and study among government offices. For the time being, authorities will implement a plan to enforce virtual currency trade using real names as well as a crackdown on irregularities such as price manipulation, money laundering and tax dodging.

The government reaffirmed its policy on cryptocurrency to act strongly against speculation and illegal activities while promoting research and development in the underlying blockchain technology. It strongly advised investors of discretion as they can face unsecured losses from heavy price swings and market uncertainties. The announcement had nothing new as it only packaged earlier measures released sporadically from different authorities.

But controversy remains about how to define cryptocurrency. The government reiterates that virtual coins cannot become a legitimate currency. This is why the Justice Ministry is proposing to close exchanges that trade fake currencies.

But it would go against the digital tide in the financial and other industrial sectors to outright ban virtual currencies. Regardless of what authorities think of the money, it is an asset that over 3 million Koreans invest in. It would be best to draw the trade into the legitimate framework and regulate or tax it as any income-generating asset. It should first define whether the currency really fits into the securities, commodity or asset category. All the related offices — the Finance Ministry, Financial Services Commission, and the Science and ICT Ministry — should explore the issue with discretion.

After the controversy sparked by the minister, the government said the policy over cryptocurrency would be led by the Office for Government Policy Coordination. But it must first explain how the justice minister came to make the bombshell statement and why the Blue House does not take responsibility for the confusion. The government often flip-flopped on policies and demonstrated a lack of communication among offices. It must come up with adequate measures to tackle speculation while advancing the skills and technology so as not to kill fledgling blockchain demand and industry.

JoongAng Ilbo, Jan. 16, Page 30