One Step at a Time: South Korea Moves Closer to a Decentralized Future
Last week we were greeted with the news that the Supreme Court of the Republic of Korea has reversed a lower court ruling and deemed digital assets to be property of value that can be confiscated in the case of criminal proceedings. The markets responded with a hiccup of celebration, then promptly rolled over and went back to sleep.
Still, it seems that some market watchers are taking the ruling as a positive step toward the legitimization of digital assets in South Korea. The news comes on the heels of starry-eyed news reports that the National Assembly has proposed to lift the ban on ICOs, but the committee responsible, the Presidential Special Committee on the Fourth Industrial Revolution, includes no legislators at all. Instead, its 25-member body comprises 6 government officials and 19 private sector advisors drawn from business and academic fields. The Special Committee may publish legislative and policy proposals in the hopes that they will be taken up by one of the Standing Committees of the National Assembly, but that is not the same as National Assembly members making policy or legislative proposals to lift the ban.
That said, the move does represent a certain amount of political maneuvering by the ruling party.
The Moon administration’s strategy for dealing with blockchain is muddled at best. On one hand, the response of its Ministry of Justice to digital assets has been stifling, provoking mass petitions earlier this year against the possibility of banning domestic crypto exchanges.
On the other hand, the official position of the ruling party remains supportive of the development of laws and regulations for new technologies. Notably, the outcry over the Ministry of Justice’s “exchange ban” trial balloon forced an unusual clarification from the Moon administration, which — true or not — stated that the Ministry had overstepped its bounds in proposing the new policy. Furthermore, five of the government officials on the Special Committee are ministerial-level, meaning they are members of President Moon Jae-in’s state council. With their proposals on May 30, the Special Committee and its five ministers added a new dimension of complexity to the Moon policy book, aiming sharp criticism at the government’s slow response to provide transparency, safety, and regulatory certainty to investors.
What does this mean for the Moon administration and the legislative future of crypto in South Korea?
Given the mixed messages from the current administration, the proposal functions as policy signaling and not much else. It allows the ruling party to continue to push the narrative that the Blue House and its People’s President fervently support the adoption of regulation and laws in the crypto space, but their hands remain tied by outdated regulations and a sluggish National Assembly.
The reality lies somewhere in between. The perception of heavy opposition allows the Moon administration to walk an incremental path toward the creation of a legal and regulatory framework for crypto assets.
That is the true intention of South Korea’s ruling party: to approach the problem bit by bit, step by step, whether its homegrown crypto users like it or not.