Earlier this month, one of the go-to sources for tracking cryptocurrency prices ‘CoinMarketCap’, announced that it is excluding data on South Korean exchanges. One of the major reason for this move, as claimed by CoinMarketCap, was “the extreme divergence in prices from the rest of the world and limited arbitrage opportunity.”
Owing to heavy investor rush on the Korean exchanges last month, cryptocurrencies were seen trading on a huge premium in there. The inclusion of the data from the Korean exchanges resulted into huge diversion in cryptos’ price in comparison to the rest of the world.
However, CoinMarketCap has again reversed its decision and confirmed that it has put the data for tracking crypto prices, back into its register. CoinMarketCap’s this decision to reinstate South Korean exchanges comes without any prior announcement. Unlike earlier, when the markets collapsed by almost 10%, this time the market held steady not demonstrating any, even positive reaction.
The timing of this decision is very crucial – it comes just a day after the South Korean government implemented a ban on anonymous trading accounts. Last year, South Korea witnessed an extreme madness for crypto trading within its local investors, which sparked severe concerns within the government bodies.
With the start of 2018, the official Korea started taking regulatory measures in order to get control over the crypto madness, and other illicit activities of tax evasion and money laundering. South Korea’s Financial Services Commission has enacted a series of rules which it hopes will “reduce room for cryptocurrency transactions to be exploited for illegal activities such as crimes, money laundering, and tax evasion.”
The rules have been published in a document titled Financial Measures to Curb Speculation in Cryptocurrency Trading, which states:
- Cryptocurrency trades will have to run through real-name bank accounts linked to cryptocurrency exchanges.
- Users wishing to make new deposits will have to make an account with the bank linked to the exchange using their real name.
- Minors under the age of 18 and foreigners will not be able to open these accounts.
- Financial institutions now need to follow guidelines that require them to verify additional information for cryptocurrency exchanges, like whether the exchange checks the users’ identification.
- Banks should submit a Suspicious Transaction Report if they suspect something. An example of potential money laundering is if a user withdraws more than $10,000 every day.
- Banks must refuse to offer accounts to exchanges if the exchanges don’t provide their users’ identification.
While talking to CNBC, Julian Hosp, co-founder of cryptocurrency firm TenX said:
“I think it’s the start of a crackdown on anonymity and the illegal use cases that some cryptocurrencies might have.” Hosp further added that “If afterward, investors and companies have more legal security working in the ecosystem, it’s going to have some short-term downsides, but long term, it’s going to have a really, really big boost.”
Last year, when the crypto market was at its peak around Nov-Dec 2017, the price of Bitcoin on U.S exchange and that on South Korean exchange differed by more than thousand dollars. However, in January the prices seem to have stabilized a lot. This might be one of the reasons for CoinMarketCap to reconsider its decision on Korean exchanges. Still, it is not clear whether the decision made is permanent.