South Korean Law Firm to Try to Appeal Exchange Regulations

The Anguk Law Office, a Seoul-based law firm, revealed on Tuesday that it intends to take the South Korean government to court to fight recent cryptocurrency exchange-related regulations.  According to The Korean Times, the appeal was filed on December 30th through the Constitutional Court’s online system on the grounds that the mandates are unconstitutional.

Introduced last week, the regulations place a ban on anonymous trading, imploring banks to bar exchanges from setting up virtual accounts for their customers’ funds.  Currently, exchanges use virtual accounts in place of actual bank accounts to streamline the trading process, making it easier for them to manage user accounts and funds.  The regulations require exchanges to transfer funds through “real-name accounts” so as to verify an account holder’s identity.  This measure is meant to stamp out money laundering, fraud, tax evasion, and other illegal activities.

These mandates are expected to take effect by January 20th, and in anticipation, Korean banks have stayed exchange attempts to open new virtual accounts.  In effect, this means that newcomers hoping to invest in cryptocurrencies will have to wait, seeing as exchanges have relied on virtual accounts to handle client funds until now.

“The government’s regulation is devaluing virtual currencies by making trading very difficult,” The Anguk Law office argues in response to the developments. “Thus, this is an infringement on people’s property rights by the government’s unlawful measures.”

South Korean officials have disavowed cryptocurrencies as an official form of tender or currency, and since the state doesn’t recognize them as real financial assets, the firm argues, there is no law in place that could feasible govern their being traded. As such, the government should introduce formal legislation before trying to regulate what the Korean people see as a legitimate commodity.

“We agree that regulations are necessary. But regulation should come after related laws are implemented. The petition is also a request for the government to respect people’s property rights and introduce regulations after reaching a social consensus,” Jeong Hee-chan, one of the office’s lawyers said in a statement.

“It is very worrisome that the government is likening investors’ success to a morally reprehensible speculation without sufficient review of it,” he concluded.