South Korea’s Ministry of Small and medium-sized enterprises (SMEs) and Startups (MSS) will exclude cryptocurrency exchanges from the Venture Enterprise Classification.
According to a press statement released by the Ministry on Monday, it will not promote crypto exchanges as venture enterprises. Loosely translated, the statement read:
“The Small and Medium Venture Business Department [of the MSS] has no intention of regulating cryptocurrency trading and disclosures (ICOs), but as problems such as speculation and hacking emerge, cryptocurrency exchanges are not a target for the government to promote as a venture enterprise.”
This decision to drop crypto exchanges from the Venture Enterprise classification goes contrary to an earlier decision to consider crypto exchanges under the category. The country which banned Initial Coin Offerings (ICOs) were reportedly taking steps to formalize the position of crypto exchanges as financial institutions. Local reports suggested authorities were creating a “Cryptocurrency Exchange and Brokerage” classification which will allow these exchanges to be regulated just like banks. This statement from MSS will dampen the optimism of cryptocurrency enthusiasts in the country.
South Korea has been contemplating several cryptocurrency regulations and approaches since last year. It is likely that the cyberattacks on two crypto operators in the country within weeks must have influenced their approach as they tread with caution in order to protect residents.
Despite the rebuttal of cryptocurrency exchanges and ICOs, South Korea will continue to advance in the development of blockchain technology. “[We] will also foster blockchain technology and related companies at the government level,” the MSS said in the statement. Blockchain is a major focus in the country’s special training for youths as well as in future budgetary spending. The country earmarked 5 trillion won (about $4.4 billion) for development of blockchain and seven other technologies including big data and artificial intelligence (AI).