A lot has been happening in South Korea over the past few days. There has been a huge and unprecedented growth in the investor participation in cryptocurrency market which played a major role taking the valuations of the crypto market up and above $800 billion, before the recent correction.
The interest for buying cryptocurrencies is so big amongst investors that most of the cryptocurrencies are often seen trading at a premium price of nearly 20-30% on Korean exchanges in compared to other global exchanges. With the frenzied craze for buying cryptocurrencies within the Korean investors, the government sees this as a sign of worry and concern.
As a result, the government has recently imposed some regulations on the working of local exchanges and have asked them to submit details of investors with their bank accounts. The government calls this a step to curb money-laundering and tax evasion. In yet another move of the crackdown, reports suggest that the Korean government is working in tandem with authorities from Japan and China to bring new rules for cryptocurrency trading.
Two days back, local website Yonhap News reported that the representatives from Korean Financial Services Commission (FSC) have met their counterparts from China and Japan in order to discuss the intricacies of crypto investment. As per the source, FSC Chairman -Choi Jong-ku – told reporters that Japan and China are looking forward to co-operating with South Korea in its efforts to eliminate speculative trading.
Jong-ku repeatedly told that investing in cryptocurrencies is absolutely “irrational”. He further stated “[A] fever of speculative investment in cryptocurrencies is ongoing … however, cryptocurrencies are unable to play a role as a means of payment.”
South Korean officials from the Financial Intelligence Unit and Financial Supervisory Services are currently inspecting six major banks in the country to ensure that they are complying with the recently implemented anti-money laundering regulations. The banks which are being investigated are having ties will exchanges that have witnessed huge trading volumes in the past few days. As said earlier, the prices on these exchanges had been trading at a premium in comparison to other marketplaces.
A similar crackdown method was seen last year in China when government authorities started inspecting local exchanges. This was the very beginning of China’s crackdown on cryptocurrency operations in the country. Later in September 2017, China went further banning Initial Coin Offerings (ICO) and local Bitcoin exchanges operating in the country. The much recent news is that the central bank of China is planning to hit a final nail in the coffin by banning Bitcoin miners from operating in the country.
South Korea seems to be moving on a quite similar path. Having banned ICOs back in September 2017, the government is now cracking down on anonymous Bitcoin trading in the country. CoinMarketCap, which is considered as a go-to source for tracking the price of cryptocurrencies recently excluded three Korean exchanges – Bithumb, Coinone, and Korbit from their averages “due to the extreme divergence in prices from the rest of the world and limited arbitrage opportunity.”