Cryptocurrency Trading to be Banned in South Korea

Cryptocurrency Trading Could Be Over Soon

South Korea accounts for a significant portion of the world’s cryptocurrency trading. Now, according to the country’s justice minister, the government is getting ready to pass a bill that could outlaw crypto-trading. Soon after this announcement, the price of bitcoin fell by as much as 14% while other cryptocurrencies also took a major hit (CoinMarketCap).  Meanwhile, South Korea’s tax collection department cracked down on local crypto-exchanges. These exchanges have been accused of tax evasion.

South Korea is Major Crypto-Trading Hub

As reported by CNBC, the CryptoCompare website shows that the South Korean won accounts for over 10% of the world’s total Ethereum trading. In addition, five percent of all bitcoin trading occurs using South Korea’s won. Moreover, approximately 20% of all bitcoin transactions are processed in South Korea. Due to such high demand for cryptocurrencies in South Korea, crypto prices in South Korea are a lot higher than world averages.

Cryptocurrencies and cryptocurrency trading is so popular in South Korea that people of all age groups constantly check crypto prices every day. South Korean students and workers are known to actively trade crypto during their breaks. Even the country’s senior citizens follow the crypto-market.

Great Concerns About Cryptocurrencies

Park Sang-ki, South Korea’s justice minister stated, “There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges”. So, what exactly are these great concerns? The ones that most people are aware of are tax evasion, money laundering, and the hacking of crypto-exchanges.

A few other things to note here are that this might not be a complete ban on cryptocurrency trading since the minister said the ban would only affect trading through exchanges. We have already learned that when governments clamp down on crypto-activity, people find other ways to get it done. For example, when the Chinese government started to ban centralized crypto-exchanges, cryptocurrency trading was still being done via peer-to-peer exchanges.

Parliament Might Not Approve Ban

At this time, the ban on cryptocurrency trading is simply a proposal by the justice ministry. Therefore, the country’s parliament  may or may not approve this move. Crypto-enthusiasts have strongly voiced their opposition to this ban via social media. There’s now an online petition with about 54,000 signatures that opposes this ban.

Even if this ban is pursued by the government, proper legislation to enforce the ban cannot be passed unless a majority vote from the 297 National Assembly members is obtained. Practically speaking, it could take many months or years for this to happen. So, it’s quite possible that this ban could not even go through.

Multiple Raids By the Government

Coinone, one of South Korea’s leading crypto-exchanges, was raided by the country’s National Tax Service authorities. According to an official from Coinone, “Local police also have been investigating our company since last year, they think what we do is gambling”. In addition to Coinone, Bithumb was also raided by tax officials. A spokesperson from Bithumb said, “We were asked by the tax officials to disclose paperwork and things yesterday”.

Regulators Clamping Down on Crypto

South Korean regulators have been quite active as they try to create a legal framework around cryptocurrencies. Just a few days ago, they began inspecting crypto accounts offered by six of the country’s banks. These inspections will check if banks are complying with the government’s recent ban on anonymous cryptocurrency accounts. The government also intends to track and tax capital gains accumulated from crypto-trading. All these measures seem to be part of a larger and concerted effort to regulate cryptocurrencies and their trading.

Regulators around the world find it to be quite challenging to regulate cryptocurrencies. As most crypto watchers are now aware, world governments are busy studying crypto and its underlying blockchain technology. They’re even considering launching their own state-backed cryptocurrencies. With all these developments, it should be evident that the crypto-market is growing and evolving. So, these investigations by regulators are not something that we should start panicking about. Just take a deep breath and try to look at the bigger picture by researching and informing yourself about the crypto-world on a daily basis.