South Korea Restricts Cryptocurrency Trading
Starting January 30th, a number of restrictions will be imposed by the South Korean government regarding cryptocurrency trading. The concern has risen after numerous cyber-attacks in the previous year. The cryptocurrency trading will not be possible anymore with anonymous bank accounts.
20% of Bitcoin transactions originate in South Korea. It is a well known that a big part of the population is actively involved in cyber currency trading. Many of them are inexperienced young investors, such as college students whose investments could turn out with a big loss, considering the volatile nature of cryptocurrencies. In the South Korean survey conducted by Saramin, about 30% of business workers trade in Bitcoins and other cryptocurrencies.
The ban is mainly designed to address the danger in the cyber world. This would be the first step to reduce cybercrimes and money laundering.
South Korea is the third largest market for Bitcoin trading after Japan and US. This was strongly influenced by the population’s obsession to purchase cyber currencies. Such high demand inclined many exchanges to make special offers, which has considerably boosted and increased the auditory target to housewives and students. The ban also addresses this behavior, which was called by some governmental officers as ‘irrational’.
In the recent months, the rise of cryptocurrencies has raised worries about people giving up on making money through more creative ways. The South Korean unemployment rate is growing and in a relative manner, it became clear that the massive investments in cyber currencies could considerably slow down the economy.
Since South Korean government became more aware of the cryptocurrencies’ danger, there has been speculation about plans to shut down some exchanges. It is still unclear if this will take place, but the Financial Services Commission Bureau has already stated that measures toward it will be planned.
The new rule will most likely drop the number of cryptocurrency owners, as everybody should already have their crypto wallets linked to bank accounts until the policy kicks in. Similarly, the ban restricts foreigners from opening new cryptocurrency accounts.
The exchanges might get hit hard by the tax collection, which will take place on January 29th. The government stated that will collect up to 24.2% of taxes from South Korea’s exchanges.
Home to some of the world’s largest anonymous exchanges, they will have to pay as much as $60 billion that include local and corporate taxes. Such exchanges as Bithumb, Korbit, and Upbit will be affected by this policy.
The restriction will corner many investors, as the governmental officials said – it will prevent them from experiencing potentially huge losses. However, a similar outcome as in China previous year might occur, when the ICO ban came into power. While South Korea is planning to restrict the cyber trades, on the other side of the sea, Japan is expanding their markets and their policies to ease the investment process. Many apps are already accepting cryptocurrencies as payment methods, and there have even been diverse ideas to secure investors’ actions in the crypto space. This might lead to a new wave of young South Korean immigrant investors in Japan, who might trigger another regulatory application in the East.