Gov’t keeps up tough talk on its policies on bitcoin

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Gov’t keeps up tough talk on its policies on bitcoin

Although the government has decided not to ban cryptocurrency trading for the time being, it wants to break the back of Korea’s cryptocurrency mania, which it considers gambling, not investing.

The closing of cryptocurrency exchanges is still on the table, as is the possibility of pulling out all of the government’s indirect investments on cryptocurrency exchanges if it finds illegal activities.

In a radio interview Tuesday, Finance Minister Kim Dong-yeon said the possibility of shutting down cryptocurrency exchanges as announced by the Justice Ministry last Thursday is still a possibility in the future. “The closing of the cryptocurrency market is still an option that is alive,” said Kim. “There should be a serious review among government departments.”

Kim said the problem with shutting down the exchanges is certain side effects, such as the transactions shifting overseas or exchanges going underground. “There is a lot of abnormal speculation in regards to cryptocurrencies and the government position is that there is the need for rational regulation.”

But no one knows what “rational” regulation should be for the new and enigmatic cryptocurrencies, which some consider financial products or assets and others see as mere pyramid schemes. “Here there is no unified global standard all over the world,” Kim said. “We are currently in discussions on coming up with specific measures, including taxation.”

Kim stressed that the government will come up with comprehensive measures and apologized for the government’s recent mixed messages.

Hong Jong-haak, Minister of SMEs and Startups, had a stronger message, saying that the government could withdraw its investments in cryptocurrency exchanges. “Problems with the cryptocurrency exchanges are surfacing,” said Hong on Monday in an interview with a local news outlet. “We plan on recouping our investment funds from those that have been confirmed having problems.”

The government fund of funds (FOF) is a mutual fund made of investments provided by eight different government departments, including the health ministry, employment ministry and environment ministry. It invests in investment groups such as venture capitalists that, in turn, invest in start-ups and SMEs. It is estimated that eight such groups have invested in the cryptocurrency exchanges.

The face-off between the government and cryptocurrency investors got tense after the Justice Minister last week announced the government was shutting down the exchanges - which was quickly retracted by the Blue House and other government agencies.

President Moon Jae-in weighed in Tuesday. “When it comes to a policy that involves different [government] departments, it is natural for each department to have different views,” Moon said during a cabinet meeting Tuesday.

“Through the process of fine tuning these different positions, a final government stand will be made.”

As of Tuesday a petition on the Blue House website opposing the closing of the cryptocurrency exchanges has gotten more than 200,000 signatures. If a petition draws more than 200,000 within 30 days the Blue House has to make a response. The petition was started on Dec. 28.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]
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