The Korean government is preparing to ban the trading of crypto-currencies on exchanges. The country’s Minister of Justice, Park Sang-ki announced “Cryptocurrency trading is looking similar to speculation and gambling. South Korea’s [cryptocurrency] trade is considered abnormal abroad.”
We have written skeptically about crypto-currencies many times at Youngresearch.com (see here, here, here, and here for a sample). Despite structural issues facing the use of cryto-currencies as a normal means of transaction, the biggest threat to the currencies has always been regulatory. China was the first major economy country to begin a big crackdown on crypto currencies, and now South Korea appears set to follow. Eun-Young Jeong and Gregor Stuart Hunter report:
Hours after Mr. Park’s remarks, a spokesman from South Korea’s presidential office said abolishing cryptocurrency exchanges was “one possible measure prepared by the Ministry of Justice, but it’s not final.”
“The final decision will be made after consultation among ministries,” the spokesman added.
South Korea’s share of global bitcoin trading grew significantly last year, raising alarm bells among government officials.
Around 4.5% of all bitcoin transactions globally used the Korean won during the past year, making it the fourth-most widely used national currency in bitcoin trading after the U.S. dollar, the Japanese yen and the euro, according to data from CryptoCompare.
The country is more active in markets that trade alternative cryptocurrencies to bitcoin, known as altcoins, CryptoCompare’s data show. The South Korean won is the second-biggest national currency used for trading ether and Bitcoin Cash, a rival to bitcoin launched last summer.
South Korea’s government has tried to take a firm line to protect investors from potential losses. The country banned launches of new cryptocurrency tokens, known as initial coin offerings, in September last year.
The country’s prime minister Lee Nak-yon said in November that rising interest in cryptocurrencies could “lead to some serious distorted or pathological phenomenon.”
South Korea’s disquiet over bitcoin trading follows drastic moves taken by China, which shuttered cryptocurrency exchanges last year and is now trying to shut operations that produce bitcoin, a process known as mining.
Read more here.
Jeremy Jones, CFA
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