Cryptocurrency and blockchain technology, which is receive attention as the key factor of the Fourth Industrial Revolution, are recognized as innovations of information technology by showing the operational possibility of a decentralized currency system based on the concept of ‘distributed ledger.’ The great interest on cryptocurrency is becoming an important social phenomenon. Various terms such as ‘Electroniccurrency’, ‘Virtualcurrency’ and Cryptocurrency have been used in academic essays, media and government policy. Cryptocurrency can be defined as a generic term for the digitalized value using cryptography to establish a decentralized digital trading system of P2P method using blockchain technology. There is no central organization in charge of the issuance and circulation of cryptocurrency and sine the issued amount and value are determined by the rules set by the initial issuer, Cryptocurrency has different characteristics from that of digital currency. For this reason, this study has used the term ‘cryptocurrency.’

The cryptocurrency has following characteristics. First, there is no third party or central system, which mediates trading through P2P method. However, the recent appearance of exchanges which convert cryptocurrency into actual currency has led to the centralization of crypto currency. Second, cryptocurrency pursues anonymity. Anyone can trade cryptocurrency through the internet without personal information. However, as exchanges are used to convert cryptocurrency into actual currency, anonymity is decreasing at the same time. Third, the owner of the wallet is not verified by a central system, but only by the ownership of a secret key. So, the leakage of secret key leads directly to loss of cryptocurrency. Fourth, because of the absence of a central manager, transactions made by mistake cannot be undone and there are no agent to mediate disputes. Fifth, in principle, every transaction from the first block is made public on blockchain. Through this process, it is possible to prevent forgery and gain transparency and financial accountability.

As it became clear that cryptocurrency can be was convertible, the anonymity of cryptocurrency drew interest of criminals. Since 2011, Bitcoin was used to trade drugs, forged passports, and contract hacking on ‘Silk Road’, Darkweb created on Tor. Hackers began attacking large-sum exchanges. Recognising that ordinary people have difficulties in understanding the complicated technology, criminals are conducting fund-raising business without permission, using Initial Coin Offering (ICO). Researchers of this study have empirically analyzed national and international crimes using internet searchers, media reports and police investigations. As a result, the study has classified ‘Cryptocurrency-related Crimes’ into ‘Cryptocurrency Infringement Crime’s, which use crypto currency and its management system as target of crime, and ‘Crime Using Cryptocurrency’, which uses cryptocurrency as means of crime. ‘Cryptocurrency Infringement Crime’ can be classified as hacking or malicious code crime. Crimes which target cryptocurrency and related systems, hacking or attacking weak points of exchanges or personal wallets fall into this category. ‘Crime Using Cryptocurrency’ uses cryptocurrency for trade of drugs and firearms, ransomware, use of illegal contents, fund-raising business without permission and fraud, money laundering, price manipulation.

However, a discussion on legal policy to deal with such problems are just at a beginning stage. This study examines the characteristics and structure of crypto currency and blockchain, attempted the classification of cryptocurrency crimes, and deduced potentray legal and technical problems by analyzing crational and intermatnal and crime trends and prospects. The study also looked into the government’s regulations on cryptocurrency at different stages and agencies and examines the alternatives legislation proposed by Congressman Yong-Jin Park, Especially, sith espect to administrative regulation of cryptocurrency, it the study examines the current state and issues on a legislation of monetary recognition, ICO, foreign exchange transaction, information security and consumer financial protection. Also, an analysis was conducted on regulation of illegal funds, procedures of compulsory investigation, confiscation, and additional collection and mutual legal assistance. The study proposes regulations and an improvement plan for solving of paease specity.

First, to set the basic direction of legal policy, it indicates that regulatory policy must be discussed together with promotional policy, taking technological excellence of cryptocurrency into account. For lawmaking, systematic regulation under one legislation is seen to be better than providing regulation under separate legislations. Congressman Yong-Jin Park’s legislation, which concentrates on ‘Electronic Financial Transaction Act’ is more reasonable than the government’s ‘Act of the Regulation of Conducting Fund-raising Business Without Permission.’ ICO should not be banned, raller allowed once it mets certain registration requirements and exchanges should introduce a registration system, verify customers and report suspected fraud cases.

Related to criminal law and criminal investigation, it proposes the following policy measures. First, more active criminal justice policy measures should be taken against money laundering and price manipulation using cryptocurrency. Specially, new penalties should be imposed for providing mixing service for crime. When investigative authorities receive cryptocurrency transaction records from exchanges, court permissions of should be more detailed than warrants. A System for cryptocurrency information analysis should be established, and mutual legal assistance capacity should also be strengthened. In addition, all Stare agencies, including investigative authorities, ought to be required conducting research on trace and analysis of cryptocurrency, especially developing tracing methods in the Darkweb. Lastly, international standard and organization on issues and regulation of cryptocurrency need to be newly established, so that the international society can counteract in cooperation. As such, it hopes for the minimization of crime and side effects and opportunity for Korea to take a leap forward through a systematic regulation of cryptocurrency.