Tuesday, July 23, 2024

    Clampdown on Cryptocurrencies continue in South Korea

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    Another week passes and another Asian nation makes moves to regulate the rising tide of interest and investment in cryptocurrencies. Last week it was Vietnam’s turn to ban them, this week South Korea’s central bank announced that it wants to regulate Bitcoin as a commodity as opposed to a currency.

    However, instead of outlawing cryptos completely, as we have seen in China and Vietnam, the South Korean government intends to focus on cracking down on criminal activities. Currently, digital currencies are not included in criminal legislation which is something the government wants to change.

    The central bank’s stance on cryptocurrencies is quite clear:

    “It is difficult to look at [virtual currencies] as money by [the definition] of Bank of International Settlements (BIS). Regulation (of virtual currencies) is appropriate because it is regarded as a commodity. It [cannot be] regulated at the level of a currency.”

    Last year the South Korean government created a digital currency task force in order to research the regulatory and licensing parameters for Bitcoin and crypto exchanges. The body failed to come to an agreement on how to handle digital currencies which largely remain a grey area when it comes to the blacks and whites of banking regulations and systems. This is part of their appeal and a large portion of digital currency users and traders remain advocates for the technology for this exact reason – the central banks are not controlling the money, the people are.

    Governments don’t like this at all, especially those in Asia which tend to be more authoritarian than western nations. As advised by the task force, South Korea’s Financial Supervisory Service (FSS) has issued a ban on ICO’ mirroring the actions of the Chinese government last month. Claiming to protect users from fraud, the government wants to be seen to be acting in the people’s interest; However, critics claim that this move is another step towards banning exchanges outright and taking control of digital currency trading within the country. Banks in the country will begin to actively monitor transactions and take note of unusual cash flow events in an effort to prevent money laundering.

    Bitcoin and altcoin prices were not really affected by this move beyond the usual market fluctuations as trading and cryptocurrency exchanges are still permitted in South Korea. Small dips may have occurred but the general sentiment is still strong, Bitcoin keeps climbing, especially now that China may be back onboard.

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