South Korea’s largest Bitcoin and cryptocurrency exchanges Bithumb, Coinone, and Korbit are ready for the imposition of strict regulatory frameworks by the local government and financial authorities.
Bithumb ready to adopt new regulations
Yesterday, Dec. 13, the South Korean government revealed the details of the emergency cryptocurrency meeting it had held on Dec. 12. South Korean financial authorities stated that in the coming weeks underaged investors and foreigners will not be allowed to invest in Bitcoin and other cryptocurrencies in the market.
By next week the South Korean government is expected to roll out a few regulatory frameworks focused on investor protection and taxation. One of the policies currently being discussed is the possibility of equally distributing the daily trading volumes of cryptocurrency exchanges across the market and implementing stricter Know Your Customer (KYC) and Anti-Money Laundering (AML) policies.
Bithumb, South Korea’s largest cryptocurrency exchange with a larger daily trading volume than the country’s main stock exchange KOSDAQ, said that it welcomes regulations from the local government, as it would further legitimize, stabilize, and validate the South Korean cryptocurrency exchange market. Bithumb said:
”A good set of regulations will nurture the (virtual currency) market, and we would welcome that.”
For many years the South Korean government was hesitant towards regulating the local cryptocurrency market and industry, as it believed that any form of regulation would lead general consumers to consider it as an endorsement and validation of the space.
However, the South Korean government has admitted that the market has become far too big for it to dismiss and has revealed its plans to follow the regulations of other leading markets such as Japan and the US in the long-term. A spokesperson said of a cryptocurrency task force formed by the government:
“The South Korean government has no other choice but to follow the regulatory frameworks and trends established by other leading governments. While there certainly exists a negative reputation attached to cryptocurrencies, the government’s stance is to allow what has to be allowed, for the benefit of the South Korean market.”
Why are regulations in South Korea necessary?
The South Korean government and the country’s central bank are concerned over two main trends in the local market: underaged investors engaging in cryptocurrency trading and the emergence of multi-million dollar ponzi schemes.
Last week, Cointelegraph reported that everyone in the traditional finance sector in South Korea is rushing to invest in Bitcoin and other cryptocurrencies. Tens of thousands of middle to high school students and college students are said to be trading cryptocurrencies on a daily basis, frequently creating trades, orders and checking the price trend of the market during classes.
The South Korean government and its prime minister Lee Nak-Yeon expressed their concerns over such trends and ultimately enforced a ban on trading for underaged investors.
Another issue with the South Korean market is the growing size of ponzi schemes. Last month, a $200 mln cryptocurrency-related ponzi scheme was discovered; its operators coaxed investors with a hefty monthly return and stole the funds of the investors.
Due to the lack of regulations and policies in South Korea, the state of the local cryptocurrency market remains premature. The aim of the South Korean government is to lead potential investors into the strictly regulated cryptocurrency exchange market, rather than unregulated over-the-counter (OTC) markets which are prone and vulnerable to ponzi schemes.