Cryptocurrencies Corrupt Our Youth, Says South Korean Leader, Eyes New Regulation
South Korea is one of the world’s biggest Bitcoin markets, accounting for almost 20% of all trading volumes. Yesterday Korean exchanges saw bitcoin prices top $12,000, with buyers paying a premium as local demand is so strong. However, it seems that not everyone is a fan.
Prime Minister Lee Nak-yeon warned this week that cryptocurrencies were a gateway to illegality, drugs and fraud. He called on government agencies to investigate, adding that if left unaddressed these issues could lead to, “serious distortion or social pathological phenomena”.
Despite public enthusiasm, Korean authorities have been conservative about cryptocurrencies. In September the financial regulator announced a ban on Initial Coin Offerings (ICOs), the raising of funds by the issuing of a cryptocurrency, in a bid to protect investors from unscrupulous scammers. Anyone involved in this increasingly popular way for startups to raise capital will be subject to “stern penalties”.
Even though daily trading volumes on South Korean cryptocurrency exchanges are greater than those on the KOSDAQ, the Korean version of the NASDAQ, authorities are reluctant to do anything which could be seen as an endorsement the new currencies. Preferring instead to treat them as unauthorised fundraising, they are allowing exchanges like Coinone and Bithumb to trade, provided they adhere to customer-protecting regulations such as ensuring that customer assets are held in separate deposits.
If the South Korean government is lukewarm on developments in the cryptocurrency space it seems that financial institutions are following public demand. Shinhan Bank, the country’s largest bank by assets, has announced the development of a Bitcoin vault, allowing their customers a safe space to store their Bitcoins. The vault is set to open next year… that is, if the bank can negotiate the country’s changing regulatory landscape.