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).