Ripple, Ethereum and Bitcoin: What is Really Happening in South Korea
Well firstly forget the shutdown, that was just noise from a headline seeking official, the only real question in South Korea is whether or not transactions will be able to occur anonymously, and the impact of a ruling against anonymous transactions will be almost zero.
While anonymous transactions do lend themselves to money laundering the reality is very few people trading on these exchanges are criminal or tax evaders, that is simply a fabrication by the establishment around the world to combat the threat cryptocurrency poses.
The cryptocurrency revolution is not going away.
Nearly 2 million South Koreans are estimated to have used cryptocurrency applications with their smartphone in the past week, data showed Monday.
A total of 1.96 million people may have used apps that allow them to handle digital currencies, such as bitcoin and ethereum, last week, up from 140,000 tallied between Oct. 30 and Nov. 5, according to data from WiseApp, an application analytics company.
Cryptocurrencies have rapidly gained popularity in recent weeks among South Korean investors hoping to make quick money, prompting the government to announce a plan to rein in the frenzy over virtual currency in Asia’s fourth-largest economy.
Last week, the Ministry of Justice announced that the government is preparing a bill to ban cryptocurrency exchanges at home.
Related to the stance taken by Seoul, the number of users at Binance, a China-based cryptocurrency exchange, jumped nearly 44 percent on-week in the wake of the announcement, the latest data showed.
The number of people who use Coinpan, an online community where users can share information about bitcoin, soared 60 percent on-week to 140,000 during the cited period, the findings showed.
The government said Monday it will make a decision on a proposed shutdown of all cryptocurrency exchanges after “sufficient consultation and coordination of opinions” as the proposal sparked confusion in the market and anger among investors.
The Office for Government Policy Coordination made the announcement, downplaying the justice minister’s remark last week that the government is working on legislation to close all virtual currency exchanges to tackle speculation.
“The proposed shutdown of exchanges that the justice minister recently mentioned is one of the measures suggested by the justice ministry to curb speculation. A government-wide decision will be made in the future after sufficient consultation and coordination of opinions,” the office said in a statement.
The government has been struggling to bring cryptocurrency speculation under control with a series of measures, including a regulation requiring real-name transactions in virtual currency trading, but the overheated market has shown few signs of cooling down.
On Thursday, Justice Minister Park Sang-ki even said that the government is working on legislation that includes a complete shutdown of all virtual currency exchanges in the country. The remark sent cryptocurrency prices plummeting and sparked angry reactions from investors.
As market confusion and investor anger deepened, the presidential office Cheong Wa Dae stepped in hours later, saying no decision has been made on the proposed shutdown. But the perceived flip-flop led to criticism that the government is handling the matter in an amateurish manner.
Monday’s announcement suggests that a shutdown is not likely in the near future.
The policy coordination office renewed a warning about the risks associated with virtual currency trading.
“As virtual currency is not legal tender and no one guarantees its value, its prices can fluctuate by a large margin … and cause big losses,” the office said. “Therefore, virtual currency mining, investment and trading should be done prudently under one’s own responsibility.”
The office also vowed to continue to push for real-name transactions and other anti-speculation measures and to deal sternly with illegal acts involving cryptocurrency trading, such as price rigging, money laundering and tax evasion.
A senior official at the presidential office told reporters that the idea of shutting down cryptocurrency exchanges is one of the “strongest” measures the government could take.
The government will make a decision on whether to use such a measure if the market continues “being overheated, in spite of a series of financial measures” to curb speculative investment in virtual coins, the presidential official said.
Despite the crackdown on cryptocurrency speculation, the office said that the government will foster blockchain technology, which powers most cryptocurrencies, and support investment in its research and development.
With the government talking down a possible ban on cryptocurrency exchanges, local banks said they would prepare for a real-name system for virtual bank accounts used in cryptocurrency trading.
The system would allow only real-name bank accounts and matching accounts at cryptocurrency exchanges to be used for deposits and withdrawals.
Officials at Shinhan Bank and NH Bank said they will continue to offer virtual accounts for cryptocurrency trading in line with financial authorities’ guidelines.
KB Kookmin Bank, which does not offer virtual accounts to cryptocurrency exchanges, said it will introduce a real-name system for virtual accounts, but no decision has been made on whether it would offer such accounts to cryptocurrency exchanges.