Many Koreans are hooked on cryptocurrencies. MPs are not. Officials at all levels below the Prime Minister have warned that the speculative boom around bitcoin and other cryptocurrencies is dangerous. Demand for virtual currency in January was so hot that South Korea was 50% more expensive than the United States. Although the premium between the two countries has shrunk since then, the concerns of policymakers have not been eliminated. As South Korea has a pivotal impact on cryptocurrencies, the regulatory outlook for the country has drawn the attention of traders around the world.
1. Why are Koreans so keen on encrypting currency?
Tai-ki Lee, a senior fellow at the Korea Institute of Finance, said individual investors in South Korea have long enjoyed thrilling financial investments for a long time. Kwak Keumjoo, a professor of psychology at Seoul National University, said that making North Korea a neighbor and leaving some people unable to sit back and relax and keep their savings in the country made bitcoin attractive to them without borders. For whatever reason, even the Bank of Korea has to ask its staff not to trade cryptocurrencies, especially during working hours.
2. How high is South Korea's status as a cryptocurrency trading center?
Beyond their own economic status. As of January 11, the U.S. dollar was the highest among the traditional currencies used to trade mostly cryptocurrencies, and the South Korean won the second place. Most of the second half of 2017, won accounted for more than 10% of the volume of bitcoin transactions. In addition, until the end of 2017, the won is the second largest digital currency by market capitalization - the largest transaction currency of the ether. However, with the rumored remarks by regulators, the won has recently fallen in virtual currency trading.
3. What is the Korean government doing?
Following the ban on first-time tokens issuance (ICO) in September last year, regulators are still considering options ranging from closing the local cryptocurrency exchange to allowing the exchange to operate under more supervision. Policymakers plan both broader policies and steps to prevent money laundering and other illegal activities. As of January 30, South Korea banned banks from accepting deposits for anonymous virtual accounts and asked banks to report suspicious traders, including traders who deposit or withdraw 10 million won ($ 9,330) or more per day from encrypted currency accounts. In addition, minors, foreigners and financial institutions may not participate in domestic virtual currency exchange transactions.
4. How to encrypt firearm market reaction?
Worried. Among them, the closure of the virtual currency exchange is a big concern for investors. This will make it more difficult for Koreans to buy cryptocurrencies and curb this important source of demand. Bitcoin plunged 12% on January 11 as South Korean Attorney General reiterated its proposal to ban the exchange. A spokesman for the then presidential text said that this was only one of the many proposals and that there was no conclusion yet. The remark helped the market regain some ground.
5. Korean officials worried about what?
Mainly money laundering, tax evasion and excessive speculation. South Korean Prime Minister Lee Lo-yon even said that cryptocurrencies could erode South Korean youth.
6. Investors will not circumvent the restrictions?
Maybe Mike Kayamori, head of Quoine, a Tokyo-based exchange, said local traders may find a way to buy cryptocurrencies even if lawmakers push the exchange ban. Quoine's customer base also includes Koreans. "There's always an underground exchange" and an OTC platform, he said. "They may buy Bitcoin there and start trading offshore again."
7. What happens next?
It is unclear whether other ministries and parliament will agree with the proposal that the Ministry of Justice shut down the exchange. In the face of strong opposition from the public, Congress may veto this proposal: On the presidential website, the number of petitions against the proposal exceeds 200,000. South Korea's government policy coordination office said only after the "full discussion and coordination of opinions" among various departments will it decide whether to legislate to ban encryption of currency exchange transactions.
In short, officials from all levels below the prime minister have warned that the speculative boom around bitcoin and other cryptocurrencies is dangerous.