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Republic of Korea
6.73 Rather Enabling Environment
In 2015-2016, South Korea was regarded as one of the most favourable places for the development of blockchain- and cryptocurrencies-related businesses. Korean regulators considered both distributed ledger technologies and associated digital currencies as promising dimensions for development.

In 2017, the South Korean cryptocurrency market was growing at a tremendous pace, ranking third in the world after the United States and Japan. The excessive demand for cryptocurrencies led to "market overheating", growth of speculative and shady deals, which caused quite a natural concern of the Korean authorities.
In September 2017, an interdepartmental task force was set up to develop the regulation of cryptocurrencies. The group's work encouraged the Financial Services Commission (FSC) to issue a decision to ban all forms of ICOs dated September 29, 2017. At the same time, other activities related to fintech and cryptocurrencies continue to be regulated in a more positive way.

On January 11, 2018 South Korea's Justice Minister Park Sang-gi announced plans to ban the activity of crypto-exchanges, which provoked financial panic and the sharp decline of bitcoin and other cryptocurrencies price. On the next day, the office of the President of Korea apologized for the uncertainty that arose and made an official statement that the prohibition of trading in cryptocurrencies was considered only as one of the possible arrangements and would not be introduced in the near future.

On January 23, 2018 the Financial Services Commission (FSC) adopted an official document that introduced, starting on January 30, regulation on cryptocurrencies for exchange platforms and banks ("Anti-Money Laundering Guideline Related to Cryptocurrency"). The Guideline provides, among other things, the introduction of a real-name system for deposits and withdrawals of funds from cryptocurrency accounts.

In February-May 2018, news became more positive. The government sought to streamline the market, adhere to the KYC and AML procedures, prevent illegal operations and speculation, while encouraging the development of innovative technological solutions, including blockchain. Talks about the closure of exchange platforms were replaced by less tense rhetoric, the government intends to support trade in crypto-currencies while respecting transparency and norms of fiscal regulation.
Rather Enabling Political Environment
7.0 points
The development of the distributed ledger technology, and, in particular, cryptocurrency market management, is of great political importance in South Korea. The volume of the market for cryptocurrencies, involvement of a significant portion of the population in cryptocurrencies trading, and the overall development of the fintech sector with the use of blockchain cause the country's political institutions to pay special attention to this matter. The cryptocurrencies market is sensitive to statements of the South Korean authorities. Approaches to regulation become the subject of sharp political debate at the level of the parliament and cause disagreements between various ministries and government agencies. In 2018 these disagreements were mainly overcame and the main stakeholders established positive consensus.
Rather not Enabling Legal Environment
3.42 points
Regulatory Convergence
In South Korea, there is no comprehensive legislation specifically designed to regulate relations in the field of blockchain and cryptocurrencies. Regulation of such relations is not within the competence of a single body; however, among the various regulators, the most important role is played by the Financial Services Commission (FSC). The Office for Government Policy Coordination is responsible for the overall coordination of activities of various regulators in this area, and in 2017, an interdepartmental task force for the development of regulation of cryptocurrencies was established. There are contradictions in various regulators' approaches, mainly those concerning the operation of exchange platforms. In judicial practice, there was a precedent of varied interpretation of the essence of bitcoin by courts of lower and higher instances.

Definiteness of Legal Regulation
The relations associated with the use of blockchain and cryptocurrencies are regulated by various legislative acts and regulators' decisions. At the same time, regulation is built rather by analogy with other similar legal relationships, and does not take into account the particularities of blockchain projects. This leads to the instability of regulation, when regulators first prohibit ICOs, and then explore possibilities for legalizing ICOs under certain conditions. The basic regulatory framework is set by the Electronic Financial Transactions Act (use as a means of payment, cryptocurrency wallets, trade in cryptocurrencies and other financial services). Certain activities associated with blockchain and cryptocurrencies are regulated by various legal acts or remain unregulated by specific acts: (albeit they are not banned): cryptocurrency mining, utility-token issues, smart contracts, taxation of cryptocurrencies and trade in cryptocurrencies.

Stability of Legal Regulation
Since mid-2017, there has been continuing debate in South Korea regarding the expansion and change of the regulatory framework for blockchain and cryptocurrencies. This has already led to the adoption of a number of decisions by regulators; however, the process is not complete. Currently, at the level of the parliament, the legalization of ICOs, taxation of crypto-exchanges, cryptocurrency transactions and incomes in cryptocurrencies are discussed.

Adequacy of Legal Regulation
In general, the South Korean regulation sets a fairly clear and rather neutral framework for operating cryptocurrencies and for the development of blockchain projects. At the same time, a number of issues either remain unresolved (mining, utility-token, smart contracts, taxation, cryptocurrency), or regulated in a restrictive manner (ICOs).
Enabling Infrastructure Environment
9.77 points
In South Korea, there is a highly developed E-Government infrastructure, telecommunications infrastructure and online services. South Korea ranks 3rd among 193 countries in the UN Global E-Government Development Index.

Furthermore, South Korea has a very high score of doing business conditions, ranking third in the world.