Digital currencies: Worries of a crackdown have abated
Enthusiastic investors are trading as they await further news about regulations
South Korea adopted high speed internet and associated technologies early, making it a perfect fit for cryptocurrency. By some estimates, three out of 10 workers have invested in cryptocurrencies. Kim Kyoung-soo, head of Ether Lab, a leading blockchain research centre in South Korea, says the country is the perfect testing ground for digital currencies.
“It’s no wonder that cryptocurrency is so popular in South Korea,” he says. “The market is more information-sensitive than any other market. And South Korea is the world’s largest IT powerhouse, the flow of information is faster than anywhere else in the world.”
The digital currency has gained so much traction that the term “Bitcoin Zombie” is the phrase of the day, with reference to investors who enthusiastically trade notoriously volatile cryptocurrencies and hardly get any sleep. “Korean young people are enthusiastic about cryptocurrencies because of fast access of information such as internet news,” says Kim Kyoung-soo. Korea’s Bithumb ranks among the world’s top 10 cryptocurrency exchanges.
Signs that an overheating market would lead to a cryptocurrency crackdown were brewing in late 2017, when Prime Minister Lee Nak-yeon related speculation about cryptocurrencies to crime and pyramid schemes, a concern shared by many countries including China, which has moved towards a complete ban.
South Korean Strategy and Finance Minister Kim Dong-yeon said in late January there would be no such ban, despite noises from other officials. “There was little preparation and research to study such a rapid growth of blockchain technology and cryptocurrency, and the drastic changes affected the stock market, the current stable economic system, and international remittances,” says blockchain expert Kim Kyoung-soo.
The government has moved to prevent the use of anonymous bank accounts to trade cryptocurrencies, and South Korean cryptocurrency exchanges are implementing “know-your-customer” (KYC) procedures. “It is worrying that Ponzi schemes or other pyramid swindlers have caused many investors to suffer. The South Korean government and regulators are expected to draw up appropriate and effective regulations to protect the interests of investors,” Kim Kyoung-soo says.
