By James Sweet III | South Korea
On Thursday, the South Korean government held an emergency meeting regarding the regulation of cryptocurrencies in the nation. The government, shortly after the meeting, announced that new regulations would come into effect regarding cryptocurrency exchanges. The government also decided to ban minors, banks, and foreigners from engaging in exchanges inside the nation.
Hankyung, a South Korean news outlet, reported that any “virtual currency [exchanges], which has more than 10 billion won in sales such as Bithumb, Coinone, and Korbit, or more than 1 million visitors per day, is expected to receive the government’s ‘Information Security Management System (ISMS)’ certification next year.” The Information Security Management System gives the South Korean government power to regulate the exchanges. Bitcoin.com reported that the government “also increased the standard and penalties applicable when a security breach occurs at exchanges.” The South Korean government would also “not allow virtual currency transactions unless the requirements for protection of investors, transparency of transactions and other measures are met through prompt legislation in the near future,” as quoted by Hankyung.
Those that live outside of South Korea are now barred from opening accounts in South Korea to engage in cryptocurrency exchanges. This ban also applies to all minors. Financial institutions, including banks, are no longer allowed to buy, sell, or invest in cryptocurrencies. As investments from South Korea boosted Ripple (XRP) and other currencies, it is likely that the value of cryptocurrencies with major investments from the nation will decrease. A blanket ban of transactions was proposed by the government’s Ministry of Justice, but the ban was not enacted as “the government was worried that if all transactions were banned, there would be controversy over infringement of private property,” according to Hankyung. If you currently own cryptocurrencies in the nation and are now banned from engaging in trade, do not fret. The government has stated that it will not take them away.
The South Korean government has also enacted a measure that calls for banks to halt issuing virtual bank accounts to exchanges, while also asking for the banks to report to the government about accounts that are owned by foreigners and minors. However, the banks are not able to do so, as they supply the accounts to the exchanges, not to the individuals directly. To appease the government, many major banks in the nation have decided to stop supplying virtual bank accounts to exchanges in the nation.
The government will begin cracking down on “the investment and recruitment of multi-level sales, fictitious coin sales, and illicit transactions,” as stated by Bitcoin.com. The government will also monitor trends in trading. A task force, consisting of public and private experts, will examine the issue of taxation to see if it will be beneficial, as well as to get user data from exchanges.
With this new crackdown on cryptocurrencies by South Korea, a problem is arising. If the government continues to regulate the marketplace, more secure and private cryptocurrencies would be needed. Monero already solves this problem, which may make it even more likely for the cryptocurrency to rise in value in 2018. It is only a matter of time before other nations begin to follow in the steps of South Korea.