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South Korea still on the fence about cryptocurrency trading ban, rattles markets

Jan 12 2018
By
Jonathan Smith

 The South Korean saga with the possible ban on cryptocurrency exchanges and trading in the second largest (by volume) market in the world continues and apparently the government is still on the fence on the matter.


Yet another series of contradictory messages from various South Korean ministers, however, have caused the Bitcoin to lose over 21% of its price on Thursday. Other major cryptocurrencies also lost a significant portion of their value. Since then the prices have recovered.


It all started with a statement of the justice minister Park Sang-ki who said the government was preparing a bill to ban trading of the virtual currency on domestic exchanges.


“There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” he said in a statement quoted by the ministry’s press office and Reuters. Further he noted that the proposal is being made after “enough discussion” with the finance ministry and the country’s financial regulators.


According to the minister, he has “grave concerns” over the heightened adoption and “craze” among the general public for cryptocurrencies.


However, the Ministry of Strategy and Finance and other members of the South Korean task force on cryptocurrencies said they neither support, nor agree with the justice ministry’s decision to ban cryptocurrency trading.


The financial ministry’s stance was supported by the Blue House (office of the South Korean president Moon Jae-in), which in the meantime was flooded with thousands of petitions against the ban. “Tax it as much as you want but don’t shut it down. My life depends on it,” one petitioner wrote on the Blue House website, quoted by Reuters.


There have also been petitions demanding the removal of Park Sang-ki from office. Those petitions claimed that the justice minister single handedly manipulated the global cryptocurrency market by releasing a statement announcing the ban, before it was agreed upon.


According to the president’s office, the blanket ban on the local cryptocurrency industry is just one of several measures proposed and a final decision is yet to be made. It would be taken after discussion and coordination with each ministry.


The eventual ban will also have to be approved by South Korea’s parliament, with a majority of at least 297 votes.


This is the latest twist in the South Korean cryptocurrency saga and it seems that it will not come to a closure anytime soon. So far there have been numerous and often contradicting reports whether or not the authorities will ban the exchanges altogether, similarly to China, or will take other measures. So far, the only certain thing is that South Korean Financial Services Commission (FSC) forbade the initial coin offerings (ICOs) in order to safeguard investors from excessive risks.


There are also plans to ban anonymous cryptocurrency trading and allow regulators to close exchanges over violations.


South Korea is the second largest cryptocurrency market, but there is no definitive data on its volume. It is home to some of the largest (by volume) exchanges like Bithumb, Korbit and Coinone. Trading in virtual coins has become a national pastime, with people seeing it as a way to make fast money. A survey among office workers in the country, quoted by Reuters, revealed that more than 30 percent of the 941 respondents said they traded in cryptocurrencies. They had an average of 5.7 million won ($5,357.14) invested in virtual currencies.


But this is not just the office workers. According to Reuters, Lee Min-kyung, a 25-year old student in a Seoul-based graduate school said she earned about 18 million won (16,973.93), double her initial investment in bitcoin. She said the government is showing haphazard responses simply because officials have “no idea.”


TAGS: south korea  bitcoin  cryptocurrency  regulation  ban 

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