After Russia last summer and Ukraine last October, it is now the turn for South Korea to qualify Bitcoin as a financial asset.
South Korea and Bitcoin, a tumultuous love story.
At the beginning of the year, a wave of panic had blown not only on the crypto community but more especially cryptocurrencies’ price. Also called ‘The Bitcoin Country’, South Korea weighs nearly 20% of all global crypto trade; it is in this region of the world where the biggest trading platforms are housed. South Korea firstly decided to ban Bitcoin, then regulate this cryptocurrency a few months later, and eventually, tax users capital gains. With so many succession of different decisions, who would have expected that South Korea classify Bitcoin as a financial asset?
In September 2017, a 33-year-old young man -Ahn- was sentenced for the sale and distribution of illegal pornography. The website was operating since 2013 and allowed its operator to accumulate the amount of 216 Bitcoins. Arrested and found guilty for distributing more than 200,000 pornographic files, Ahn was sentenced to 18 months in prison … but was not confiscated his cryptocurrency.
“It is not appropriate to confiscate bitcoins because they are in the form of electronic files without physical entities, unlike cash. […] Virtual currency cannot assume an objective standard value.” said the court.
Well, now things started going in the wrong direction for Ahn. Indeed, the Supreme Court of South Korea decided to back off. The Court therefore simply canceled the law in force to seize nearly 90% of Bitcoin of the young South Korean. On May 30, the highest magistrates in the country gave their permission to collect 191 of Ahn 216 Bitcoins. This figure is, according to the police, the exact amount accumulated through the illegal website.
“Cryptocurrency is now recognized as having value; it can be confiscated” stipulated the Supreme Court of South Korea a few months later.
Highlighting the criminal law, the Court continues saying that “The bitcoins were earned from the proceeds of crime. […] If we return the bitcoins to Ahn, it will be giving him back profits that were earned illegally from running an online porn site.”
A double-edged victory
Although Ahn has not been able to recover his bitcoins and is currently facing a severe penalty in line with his charges, this shift is symbolic for the legal status of cryptocurrencies in this part of the globe. Indeed, this change in law gives cryptos greater legitimacy when the country is in the process of legalizing and regulating ICOs. The government is cautious and has approached the world of cryptos with ambivalent resolution. In addition to the Supreme Court’s decision, it seems that a formal framework for Tokens’distribution has been proactively put in place; now more than ever.