South Korea Muses Reversal of Strict Cryptocurrency Regulations
- Korean Financial Supervisory Service (FSS) governor Yoon Suk-heun, has announced a possible relaxing of strict cryptocurrency regulations
- Cryptocurrency trading volumes dropped 90% in Korea after new regulations came into force in early 2018
- If trading volumes recover after relaxing of the current regulations, the cryptocurrency market could receive a significant boost
Cryptocurrency trading in South Korea isn’t for the faint-hearted. In fact, over the course of the past 12-months, more cryptocurrency regulation rumors and outright restrictions have hit headlines, than it is possible to keep up with.
Thankfully, South Korean authorities seem to be starting to appreciate that they have been a little too heavy handed with certain enforcement practices.
A Brief History of Cryptocurrency Regulation in South Korea
Overhype, cryptocurrency market volatility, and out of control speculation, has led to several attempts by the Korean FSS, to curtail irresponsible trading and investing.
- In September 2017, South Korea banned ICO trading and investing
- In January 2018, the FSS enacted a blanket ban on anonymous cryptocurrency trading
- Later in January 2018, a since redacted statement from the South Korea FSS, implied that the country was considering a total ban on all forms of cryptocurrency trading causing markets to crash.
- Also in January 2018, South Korea implemented a 24.2% tax on cryptocurrency exchanges, in order to bring them in line with regular stock market trading platforms
There is just one problem. Namely, that all current cryptocurrency regulation approaches have so far accomplished in South Korea, is a 90% decline in trading volumes.
What More Relaxed Cryptocurrency Regulation will mean for the Wider Market
Through 2017 to early 2018, a staggering 20% of global cryptocurrency transactions were conducted on South Korean exchanges. Sadly, this influence has resulted in detrimental effects on global cryptocurrency prices, as new regulations have come into effect. In fact, in January, Ripple XRP lost $20 billion overnight, after CoinMarketCap was forced to de-list several Korean exchanges.
Needless to say, worldwide cryptocurrency traders are hoping that relaxing regulations in South Korea, will help revive the market to a certain degree.
How Will Cryptocurrency Regulation in South Korea be Relaxed?
At present, new FSS governor Yoon Suk-heun, has not specified how he plans to soften Korea’s approach to cryptocurrency regulation. However, at the time of announcing reforms, a ruling Democratic Party politician in Korea is simultaneously leading a push to re-legalize ICOs. This being the case, it is possible that South Korean exchanges could recapture some of the 90% in lost trading volumes which they have suffered over the past 9-months.
Anonymous Cryptocurrency Trading Bans will Likely Stay
Sadly, one thing which likely won’t change when regulations are relaxed is South Korea’s stance on anonymous cryptocurrency trading. This is due to the fact that regulators are still fully committed to real-name trading systems. Specifically, ones which employ regular financial institution ‘know-your-customer’ identify verification systems.