There has been a lot of frenzy around South Korea’s rumored plans to shut down cryptocurrency exchanges. The price of Bitcoin fell following the announcement from the South Korean government. Bitcoin wasn’t the only cryptocurrency which was affected by the announcement. In fact, the top 10 most traded cryptocurrencies were also affected negatively by the plans. As it is with any of Bitcoin’s move, the overall market capitalization also suffered due to this rumor.
However, Ripple moved into an opposite direction because Japanese credit card companies have announced their interest in testing a Ripple’s technology. Therefore, there’s reason to keep an eye on Ripple’s progress in the cryptocurrency market.
The South Korean government on high alert
In late December 2017, the South Korean government has threatened that they will close down cryptocurrency exchanges within the nation and ban accounts which do not verify their identity. In addition, the government also fined Korea’s largest cryptocurrency exchange for the hacking that happened back in June 2017.
Mirroring the cryptocurrency frenzy around the world, South Koreans also caught the Bitcoin fever. Their enthusiasm for cryptocurrencies is proven as they were willing to pay a premium to trade the cryptocurrencies. Bithumb, with which is the nation’s largest cryptocurrency exchange plays a vital role in determining the prize of these alternative coins.
If outsiders were to judge the South Korean cryptocurrency situation, they would say that the South Korean government may be cracking down on cryptocurrencies. However, the government is probably more concern over the market which is showing signs of overheating.
So, is South Korea banning cryptocurrencies?
The commotion over the rumor started off when an initial report from Reuters stated that the South Korean government is prepared to close down cryptocurrency exchanges within the borders. However, the South Korean government was quick to deny the allegations because they have never released those statements. Instead, they released a document which points out several main things that the citizens should be aware of.
In the document, the government has stated that they will continue to evaluate the current cryptocurrency industry. Regulations on the industry will surely come but at a later time. Also, shutting down the cryptocurrency exchanges will only apply to those that are involved in illegal activities. Despite the highly speculative nature of the cryptocurrency market, the government will still facilitate the growth of the industry.
In response to the increase of underage and foreign investors investing in their cryptocurrency market, the South Korean government has imposed a new policy which prevents them from trading in their exchange. This is done in the hope that it will keep the speculation mania in Korea under control. The frenzy for cryptocurrencies in Korea is so great that even middle and high school students are investing in Bitcoin. The South Korean Prime Minister has voiced his concerns regarding the issue especially because students allocate a lot of their time into trading cryptocurrencies.
The banning of foreign investors in the cryptocurrency market for the South Korean borders also came after the government realises that Chinese traders brought in a lot of Bitcoin from China into the country for the sole interest of laundering money. However, this rumor comes with positive progress in the sense that the government has announced they will continue to support the growth of blockchain in cryptocurrencies within the country.
Hence, they have signaled that they do not want to interfere with the growth of the local cryptocurrency market. Instead, they will simply regulate the market to ensure that people do not get trapped in scams.
Scams surfacing in the market
Despite the criticism over South Koreans threats to shut down cryptocurrency exchanges, their concern over the emergence of cryptocurrencies is justified because there is a large scale of Ponzi schemes appearing in the market. In fact, it has recently been discovered to be in operation throughout the country which took money from the hands of people that are unsuspecting of this fraud. Local exchanges within the South Korean borders have also signaled their support for the government regulation because it will establish a trust that people have to words their exchange.
South Korea is seemingly following in the footsteps of Japan in regulating the cryptocurrency space. Although there is a negative stigma around the cryptocurrency industry, the government believes that the industry should be allowed for the benefit of the South Korean economy. So far, South Korea has been very receptive to the cryptocurrency market, and investors remain optimistic for the long-term growth of Bitcoin and the sustainability of their operations within South Korea.
Where is Bitcoin headed in 2018?
The immense popularity of Bitcoin has also affected the way that exchanges operate. In fact, major exchanges within Korea has announced that they will be no longer accepting new users. Regardless of the speculations which surrounds the cryptocurrency space, the progress of Bitcoin and many other cryptocurrencies will rely on the infrastructure and the progress being made throughout the years.