South Korea Uses Virtual Assets, Japan Uses Crypto Assets, New York Uses Virtual Currency

Meaning Varies by Definition Such as Virtual, Crypto, Asset, Currency, and Money
Most Major Foreign Countries Define It as an Asset

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The cryptocurrency craze is sweeping the world, yet the terminology used to refer to it remains inconsistent. While some call it "gasanghwa-pye" (virtual currency), others use terms such as "amhohwa-pye" (cryptocurrency), "gasangtonghwa" (virtual money), "gasangjasan" (virtual asset), "amhojasan" (crypto asset), and "digital asset," causing confusion among investors.

The confusion begins with the terms "gasang" (virtual) and "amho" (crypto). "Gasang" is a broader concept than "amho." It refers to any currency or asset used in virtual worlds such as the internet, rather than physical cash transacted in banks. However, when called "amho," it is limited to blockchain technology. The virtual currency industry argues that since blockchain technology is a system that distributes data storage and achieves encryption, the term "amho" should be used. Defining it as "gasang" makes it difficult to distinguish from electronic money already in use or in-game currencies.

The distinction between asset, currency, and money is more sensitive. An asset refers to anything with economic value, tangible or intangible. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, and Eun Sung-soo, Chairman of the Financial Services Commission, refer to cryptocurrencies as assets because the cryptocurrencies traded on exchanges generate profits through price fluctuations, making them closer to assets. This also expresses a strong intention not to recognize them as currency.

Those who call it currency emphasize that it was originally created for currency functions and that there are actual cases of its use in payments. Tesla recognizes Bitcoin as a payment method, and the overseas payment company PayPal has launched a cryptocurrency payment service. It is also defined as money issued and recognized by a country, such as banknotes or coins. With countries like China issuing Central Bank Digital Currencies (CBDCs), the term "currency" is also used interchangeably.

Under domestic law, cryptocurrencies are defined as "gasangjasan" (virtual assets). The Act on Reporting and Using Specified Financial Transaction Information (Special Financial Information Act), effective from March 25, imposes reporting and anti-money laundering obligations on those handling virtual assets to prevent money laundering. The reason for calling it "gasangjasan" in the Special Financial Information Act is that it follows the definition set by the Financial Action Task Force (FATF).

Most major countries overseas also treat cryptocurrencies as assets. Japan, which actively protects investors through legal amendments, changed the term from "gasangtonghwa" (virtual currency) to "amhojasan" (crypto asset) in the 2019 amendment of the Payment Services Act. This signifies treating cryptocurrencies, including Bitcoin, as investment targets.

Europe also defines them as crypto assets. In September last year, the European Commission adopted the "Digital Finance Package Plan," a law addressing the blockchain industry. This law also refers to cryptocurrencies as crypto assets and includes regulations such as investor protection and capital requirements comparable to the financial industry.

The United States has not unified the definition. According to a report by the U.S. Securities and Exchange Commission (SEC) released on February 26, the SEC calls them digital assets and emphasizes the need for continuous monitoring as they may be considered securities. Meanwhile, New York uses the term "gasanghwa-pye" (virtual currency). New York is a region that has proactively attempted to institutionalize virtual currency by issuing licenses related to virtual currency businesses, such as the BitLicense.

The U.S. Department of Justice uses the term "amhohwa-pye" (cryptocurrency). However, it focuses more on illegal activities related to encryption and anonymity rather than the currency function. In October last year, the Department of Justice released the "Cryptocurrency Regulation Report," which outlined cases of illegal use of virtual currency and solutions. Former U.S. Attorney General William Barr pointed out, "Ensuring that cryptocurrencies do not threaten public safety and national security is an important issue."

This content was produced with the assistance of AI translation services.