One of the largest markets for cryptocurrencies after Japan and U.S. is South Korea, as it’s believed by many. South Korea’s population is equivalent to Arizona and California if they’re put together. The cryptocurrency speculation looks like it has been overhyped unreasonably and South Korea’s government wants to take some fundamental steps now, to control this cryptocurrency trend in the crypto world.
South Korean’s Crypto-Market - Current Situation
At this time, you can clearly see a lot of chaos in South Korea. It all started when the government of South Korean officially legalized Bitcoin service back in July 2017, which caused a momentous progress in the demand for cryptocurrency trading all around the country.
North Korean hackers targeted South Korean Bitcoin exchanges in August 2017, and by the end of September, there were many rumours that South Korea was planning to execute stricter regulations on cryptocurrencies. These rumours turned out to be more serious by December and based on speculations, it changed into an absolute ban on cryptocurrency exchanges and had a bad impact on the crypto world.
South Korea Influence on the Cryptocurrency Prices
According to an estimation by The Blockchain Industry Association, South Korea has many cryptocurrency exchanges, including;
This tells us that even with 50 million people in a country, the demand for cryptocurrencies is so high that it has traded at more than a 30 % higher price than other countries.
80% of the investors in South Korea have earned from investments in cryptocurrency and almost one-third of salaried Koreans have an average of $5,000 in cryptocurrency, which is a huge acceptance of an unapproved investment based only on speculation.
How are cryptocurrency traders operating in South Korea?
Many banks including the second largest one in the country, Shinhan Bank, offer local cryptocurrency exchanges with computer-generated bank accounts. Each investor/user can use these virtual bank accounts for depositing or withdrawing huge amounts of Korean Won without using their real bank accounts, which takes a lot of time and is costly at the same time.
The industry is currently under the government’s radar, amid other fears, that illegal funds will be entering the market and management of price of cryptocurrencies will be based on speculative investments.
How’s 2018 been so far for Cryptocurrencies in South Korea?
More regulatory plans have been announced by the government to ban this anonymous cryptocurrency, in order to control cryptocurrency speculation. Meanwhile, after this announcement, several South Korean exchanges were removed by the CoinMarketCap from its website, stating that extreme price divergence is the main reason for this. Around $20 billion was wiped off Ripple’s market cap as a result. After a statement by the Ministry of Justice, news of a whole cryptocurrency ban arose once again.
Is there going to be any ban on the cryptocurrencies?
The government started to notice huge speculation that drove instabilities in the cryptocurrency market since September 2017 and in order to evade money laundering and other crimes related to it, strategies to prohibit anonymous trading on local exchanges were testified in December 2017.
The Prime minister of South Korea, Lee Nak-Yeon, warned about the hazard of cryptocurrencies being an easy way for the younger generation especially students, to get involved with such illegal activities.
Regardless of the media misrepresentation of more stricter rules for cryptocurrencies, at the beginning of 2018, Kim Dong-yeon (the Finance Minister) ensured that there’d be no ban of cryptocurrencies in South Korea. The government also proclaimed that there’ll be tax on cryptocurrency exchanges around 24%. Apart from banning anonymous trading, they’ll be banning foreigners and minors from opening any other new cryptocurrency accounts as well.
How South Korean government will enforce bans?
The south Korean government has restricted the opening of new virtual accounts and cryptocurrency traders won’t be permitted to make any deposits into their virtual currency exchange wallets. They’ll be only able to deposit it only if they’ve the name of their cryptocurrency exchange and it matches that of their bank accounts.
It’s been demanded by financial authorities to the cryptocurrency exchanges to revamp their AML (Anti-Money Laundering) and KYC (Know-Your-Customer).
Are These planned regulations of South Korean affecting the crypto-industry?
Because South Korea has such a huge cryptocurrency market, this means that these regulatory decisions of government will have a huge impact on the crypto market worldwide.
During all these rumoured reports of the government banning cryptocurrency, the total market cap of all coins was declined by 40% in just one day. But shortly afterwards, the market cap started to rise once again.
All the rumours have played a big role in the cryptocurrencies’ price, and any change in the economic decisions or law made in the hubs of major crypto, will always result in such instabilities.
However, there’s always a possibility that it will climb back to the pre-crash levels.