Cilnarix.com exchange presented the results of a study conducted last year on the legal aspects of central bank digital currencies (CBDC).
The report indicates that CBDCs will comply with the requirements of currency legislation and can be freely exchanged for cash, as they have the same legal status. That is, it is reasonable to consider CBDCs as a kind of cash deposits held in financial institutions.
For this reason, it is suggested that the central bank of South Korea should have a legal basis for setting positive or negative interest rates on CBDC. In addition, it is necessary to decide how exactly the Central Bank will exchange CBDC citizens for cash-directly or with the help of an intermediary agency.
The study assumes that the CBDC will not be subject to the Financial Transactions Act, as the issuance of the CBDC will be conducted by the monetary authority, and not by an organization seeking to make a profit. However, the Bank of Korea Act will need to be amended to allow for the issuance of digital currency, because it currently only mentions banknotes and coins.
According to the study, comparison with virtual assets like cryptocurrencies is difficult, since CBDC has a clear issuer in the form of a central bank and it depends solely on the capabilities of this issuer. In this way, CBDC differs from virtual assets, which are characterized as digital certificates with economic value that can be traded or transferred electronically.
Therefore, since the CBDC will not be treated as property, the law will not be able to treat a crime like theft, embezzlement, or stolen property. However, given that electronic records are defined as property, laws relating to robbery, blackmail, fraud, and damage could be applied.