Blockchain News, Cryptocurrency

South Korea and China Clamps Down On Violations of Cryptocurrency

China is a country that has recognized the rise of Bitcoin, and sometimes, violations will occur, which preventative measures will have to occur.  One major news headline that is being discussed right now is a South Korean police officer who has been indicted for his role in an operation on bypassing China’s capital controls.  Truly, what this police officer did is a violation and actions are being enforced.  The police officer is in violation for using bitcoin to transfer the funds, which involves the movement of 12 billion won (approximately $11 million) for doing foreign exchange services in South Korea and China.

Though this police officer was not working by himself, as he transferred bitcoin to several people who are living in China.  These people, violated the Foreign Exchange Transactions Act, and will be facing criminal charges.  The purpose of the Foreign Exchange Transactions Act is contributing to the development of the national economy, striving to facilitate foreign transactions, and maintaining a balance of international payments.  Along with this, the act stabilizes value of currency, ensuring liberalization of foreign exchange transactions.  With this violation of the act, truly the police officer and the people who were connected to the bitcoin transfer deserves punishment.

Violation That Took Place

The violation that took place is people purchasing bitcoins, and then transferring them to a Korea bitcoin exchange.  The police officer then sold the cryptocurrency and transferred the proceeds into the accounts of the designed people, who is worked with in China.  While the police officer completed this action, the person received a commission.  Also, since South Korea has an advantage in terms of higher price than China, the commission was a great amount that the police officer received.  The amount of transfer that took place was 12 billion won (approximately $11 million), and the prosecutor in China also charged a money lender of 5 billion yuan (approximately $756), applying the same technique.  While violations does occur, the Chinese Communist Party has been warning the people living in China regarding the risks of bitcoin, emphasizing mainly on operation of digital currency transfer.  On March 20, 2017, news was released in a plethora of media outlets regarding several institutions being suspected of engaging in financial business and violating the laws and regulations in China.

South Korea Looking to Tax

Currently, South Korea does not have a legal framework when it comes to cryptocurrencies, and the government is considering on taxing bitcoin uses and currently working on a bill to implement and target criminal users.  With the government working on implementing a bill, the last time that the lawmakers convene for a NTS, National Tax Service, was October 3rd.  During the hearing, NTS Commissioner Han Seung Hee answered questions regarding taxation of bitcoin.  Answering the question regarding what the taxation plan is, Han Seung Hee said, “I am still taxing business income, and I am discussing weather to tax the value-added tax or capital gains tax with regard to virtual currencies such as bitcoin.”  The government is watching closely as they work towards implementing this bill.

The lawmakers did meet in early September to discuss how to deal with digital currencies, and they came up with several measures such as making cryptocurrency exchanges conduct due diligence and implementing stricter verification processes.

China Clamps Down

With several violations such as this, the country’s government is cracking down on cryptocurrencies, though the lawmakers are struggling.  Along with the government working on cracking down cryptocurrencies, regulators are also cracking down on the initial coin offerings (ICO).  The reason on why regulators are cracking down on ICO is because of violation of fundraising laws, which could lead to harsher regulations on the use of blockchain.  News media outlets from China has been studying and researching regarding the percentage of ICO violation of fundraising has been found, and it is more than 90%.  Truly, the government is clamping down on violations and implementing harsher guidelines, which laws that are broken are surely punishable to the people who breaks them.

People needs to be aware regarding the bills and laws that are being implemented by the country’s government.  They need to know that if they do a violation, rather it be bitcoin transfer or any other problem with cryptocurrency, consequences will be dealt.  Truly, the police officer and the other people from China will face punishment in China and South Korea.