[Newsmaker] Ministries stand at odds over cryptocurrency regulations

South Korea’s government came under fire Friday for sending out confusing policy signals on bubble-prone cryptocurrency transactions, vexing investors and paralyzing market functions.

While the Ministry of Justice reiterated its latest pledge to seek for the shutdown of cryptocurrency operators, the presidential office Cheong Wa Dae and the Ministry of Strategy and Finance put the brakes on drastic actions in an attempt to steady the market.

“The shutdown of (cryptocurrency) exchanges, as the justice minister said yesterday, is the ministry’s proposal, which needs consultations among related ministries,” Kim told reporters.

“We need to approach (the cryptocurrency agenda) in a balanced perspective as (the related technology) is a fundamental component of the ‘fourth industrial revolution,’ closely intertwined with industries, security and supply chain.”

The remarks of the top economic policymaker came a day after Justice Minister Park Sang-ki said the government is seeking to eventually close down all cryptocurrency operators here.

Calling for government actions to curb rampant speculations, Park said that all related government departments consented to the ban. The presidential office Cheong Wa Dae, however, later issued a statement that the shutdown plan has not been decided yet.

Park’s announcement immediately dampened the global cryptocurrency market, provisionally removing some $106 billion in market capitalization, according to US broadcaster CNBC. South Korea is one of the key markets in the world’s cryptocurrency sector, accounting for 12 percent of Bitcoin transactions, 14 percent of Ethereum deals and 33 percent of Ripple deals.

Rattled by the government’s precarious stance, investors rushed to the Blue House’s online bulletin board to censure what they saw as excessive regulations. A number of petitioners demanded for the dismissal of top financial officials, as well as the justice minister.

The Financial Services Commission, which oversees the nation’s financial policy issues, maintained a low-key stance.

“We are to hold a meeting this afternoon with working-level officials of the six banks that offer cryptocurrency account services to operators,” an official of the FSS said, refraining from commenting on the ongoing policy disparity.

Meanwhile, major banks here decided to shelve their previous decision to activate cryptocurrency transactions.

“We decided to delay the timeline in order to promote the safety and transparency of the system,” said an official of Shinhan Bank.

The move was taken as a de facto ban on cryptocurrency-related deposits and withdrawals, as the government earlier required real name accounts for all future deals.

Other banks such as the Industrial Bank of Korea and KEB Hana Bank also gestured that they would follow suit in holding off the account system change until financial supervisors give the green light.

By Bae Hyun-jung (tellme@heraldcorp.com)