This year has become the one of the explosive growth for cryptocurrencies. Even though skeptics are never out of pessimistic forecasts and accusations of creating a financial bubble, the cryptocurrencies thrive. The popularity of this sphere made the whole world speak about bitcoin and blockchain. But for some countries the cryptocurrencies are more than just a trend, it is a real frenzy.
South Korea has always been interested in new technologies and firmly keeps one of the leading places in the IT sphere. No wonder bitcoin draw the attention of tech specialists of the country. But today you cannot surprise anyone with the deep knowledge of the cryptocurrencies because they have become mainstream.
You can find people trading digital currencies practically everywhere: prestigious business centers, universities and even factories. Kim Duyoung, a manager at bitcoin brokerage Coinplug, explains the motivation of his customers: “They see it as gambling in some ways, they try to earn more money by using exchanges”. And the results are breaking: last week a quarter of the world’s trading was created by the bitcoin investors from this country with population of 51 million.
The demand creates the supply. Lots of companies have already taken part in spreading blockchain technologies in South Korea. The local internet giant Kakao Corp. created cryptocurrency exchange Upbit which allows trading directly for Korean won.
This South Korean platform intends to become the largest of the kind in the country and beat its overseas competitors. And that is not the only example of promising blockchain development. Samsung SDS has accepted the offer to work on introduction of blockchain in Seoul’s administration.
Nevertheless, the prosperous future of cryptocurrencies is not as unquestionable as it may seem to be. The Asian region seems to be worried about the legitimacy of the cryptocurrencies.
For example, the Hong Kong finance regulator recently stated the importance of the legacy of trading operations. The top financial regulators of South Korea had already diminished the position of the cryptocurrencies by banning all ICOs. Now they aim at the whole sphere of crypto exchanges.
The South Korean government intends to expand the Act on Regulation of Similar Reception with the amendments on cryptocurrency transactions. They are expected to state six conditions of legal crypto exchanges:
- customers’ funds must be kept separately;
- investment risks must be clear for the customer;
- the real names of users must be confirmed;
- the anti-money laundering system is required;
- asset protection system must be present (for example, dispersion of cryptographic keys);
- transaction details must be disclosed to the public to achieve the needed level of transparency.
One more side of the new law is increasing the punishment for violating the rules. Anyway, some influential companies demonstrate optimism. South Korea’s largest bitcoin exchange Bithumb clarifies that “a right set of regulations will rather nurture the (virtual currency) market, and we would welcome that.”
Thomas Glucksmann, head of marketing at Hong Kong-based exchange Gatecoin, said: “The regulations in Korea will not have a negative effect. Licensing brings certainty, which encourages already regulated entities … to get involved in addition to sceptical retail investors.”
It is practically undeniable that amending the Act on Regulation of Similar Reception will have a big influence on the positions of cryptocurrencies in South Korea. The new trend is evident: governments try to implement the digital currencies into their legal sphere.