South Korea has been one of the most attractive markets for digital currency trading, but since the start of the year the country has emerged as one likely threat to the trading sustainability of digital currencies like Bitcoin.
On January 11, 2018, news broke that South Korea was taking active steps to ban the trading of digital currencies. The news sent shock-waves around the world, prompting a sharp decline in trading for digital currencies as well as sharp declines in actual valuations for individual currencies. The news has had a dampening effect on the optimism for digital currencies; weeks later, digital currencies like Bitcoin have fell off sharply. As a matter of fact, Bitcoin is on track to post its biggest monthly decline since the start of January 2015.
But traders and investors have been given a lifeline, this in the form of news that South Korea is reversing its stance on a potential digital currency trading ban. South Korea’s finance minister, Kim Dong-yeon, said in a press conference on Wednesday, January 31, 2018, that “There is no intention to ban or suppress cryptocurrency (market).”
This was welcomed news which marked a positive shift in stance from one of the biggest markets for digital currencies. The announcement from the finance minister comes at a time when other regulatory bodies in South Korea are stepping up their efforts to combat illegality ion the digital currency space. The country’s Custom’s Department recently announced the uncovering of an illegal digital currency trading ring worth nearly $600M.
The anonymity of digital currency trading has posed a real challenge for regulators. In the case of the South Korean trading ring bust, it shows the extent and speed of illegal trading that can take over legitimate trading markets.
South Korea’s reversal on the ban of digital trading comes amid a raft of measures that will help to maintain the integrity of digital currency trading. One such measure is the requirement that ties digital currency trading with the existing laws that govern foreign exchange services. Under the law only South Korean licensed banks are able to carry out transactions that involve cross-border movement of currencies. Robust reporting guidelines also help to track the movement of money, and in the case of Bitcoin and other currencies, the tracking will be significantly stepped up.
But South Korea isn’t only relying on laws made in the pre-digital currency age. A new regulation which took effect on January 30, 2018, prevents people from conducting any trading activity on the digital currency exchanges using aliases. This move, reminiscent of Facebook’s “real name” policy, is expected to stem the tide of illegal activity which includes money laundering and other criminal activities.
The digital currency trading community has so far reacted well to the news. On several forums there is talk of “Well done South Korea”; “SK saves digital currency trading” and other such positive sentiments. South Korea, as a leading adopter of digital currencies, can help consolidate trading and bring all digital currencies into the mainstream.