Blockchain and Cryptocurrency in South Korea

Blockchain and Cryptocurrency in South Korea

As one of the world’s most robust and advanced markets for blockchain and cryptocurrency, many around the world have been observing South Korea with a keen eye. At the start of the year, the Korean won was the second most used fiat currency to trade cryptocurrencies, only behind the US dollar. Recent regulations have curbed its growth, giving rise to fears that authorities in the country may completely oppose blockchain and cryptocurrencies. However, these concerns seem to be unfounded.

It is thought that the National Statistical Office, the Ministry of Information and Communication and the Ministry of Science and Technology have been working on a final draft of a blockchain industry classification. The main topic of concern is security of local cryptocurrency exchanges, with a number of high-profile cases and security breaches occurring this year. The bills will be submitted during an extraordinary session of the National Assembly according to The Korea Times.

The scheme will be the benchmark by which policies will be drafted and passed, aimed at promoting blockchain technology and regulatory frameworks. However, it remains to be seen if any of the bills will be accepted and passed off as law during the session. For the emerging industry of blockchain and cryptocurrency, it is a positive step forward – this is the first time that the South Korean government has recognized its legitimacy, with some 43 government ministries and 17 municipalities consulted on the project.

South Korea’s cryptocurrency market is one of the world’s most mature. Image from bitcointabloid.com

These discussions coincide with a deadline set previously by G20 nations which aims to draft up a universal regulatory framework for cryptocurrencies in all member nations.

However, the Financial Services Commission plans to continue monitoring bank accounts linked to cryptocurrency trading, both on local and foreign exchanges. This is to keep track of potential money laundering or other suspicious activities, although how it intends to monitor the trail of privacy coins, such as Monero, Zcash, PIVX and more, remains to be seen.

Recently, a blanket ban of ICOs in the country was lifted, while bitcoin was also legalized as a method of remittance. Although cryptocurrency is not yet recognized as legal tender, the positive steps indicate that the government is preparing itself to embrace this new technology as the fourth industrial revolution gathers pace.

Seoul’s latest move has essentially seen cryptocurrency exchanges recognized as legal corporations, falling under the category of “crypto asset exchange and brokerage”. Not only does this give the blockchain and cryptocurrency industry in the country a much needed boost, it means exchanges are now considered financial institutions that are regulated by the government.

Local traders obtain cryptocurrency using popular exchanges such as Bithumb. Image from qz.com

The potential effects of this are two-pronged. Firstly, regulation offers legitimacy to cryptocurrency exchanges, meaning that they will be under the purview of the government. For the common man that wants to start investing or trading, this lends them assurance that their money is being watched over and accounted for. For the exchanges, the legitimacy allows them to continue operations smoothly and also brings in more money from investors that may have been concerned about taking the plunge.

Realistically, a ban of cryptocurrency exchanges would have been unlikely to affect local traders too much. With many avenues for trading digital assets underground and abroad, the most likely scenario would see an outflow of won from the country. Traders would be likely to obtain bitcoin or ethereum from local underground exchanges, before trading those assets on foreign exchanges. Whether any of the potential profits would find its way back to South Korea is debatable, so it makes more sense that the government are looking to recognize and regulate the industry instead.

With South Korea being one of the world’s most mature cryptocurrency markets, it is little wonder that the rest of the world is keeping a close eye on developments. Any ruling or legislative framework could be used as a benchmark or case study for other world markets to follow or improve on, making the outcome of the National Assembly one of great interest. Whatever the outcome, it seems inevitable that the blockchain and cryptocurrency industries have a bright future in South Korea, especially with the government ready to recognize and regulate them.

Cover image from cryptalnews.com

Previous Is Cryptocurrency Legal in Africa?
Next How to buy EVR

You might also like

Is Cryptocurrency Legal in South America?

Here is a quick look at the status of digital currencies in key South American markets.

Is Cryptocurrency Regulation a Good Thing?

the issue of regulation has been at the forefront of many people’s minds.

Is Cryptocurrency Legal in Europe?

Here is a quick look at the status of digital currencies in key European markets.