coincentral-main-menu-search-eyeglass
Hamburger X.

South Korean Cryptocurrency Market Targeted by New Rule Change

south korea

The government of South Korea has excluded cryptocurrency exchanges from being categorized as venture businesses. The government announced this new cryptocurrency market rule-change through a press release published on August 13.

The document issued by the Ministry of Small and Medium-sized Enterprises explained that it would now categorize crypto-exchanges alongside bars and nightclubs, which are generally businesses that it would not encourage as venture enterprises.

The rough translation reads as follows:

“The Small and Medium Venture Business Department [of the MSS] has no intention to regulate cryptocurrency trading and disclosures (ICOs), but as problems such as speculation emerge, cryptocurrency exchanges are not a target for the government to encourage as a venture enterprise.”

The rule change marks a shift in the way the South Korean government treats crypto-exchanges, which now face strict taxation and banking tax obligations. That said, the government has earmarked 5 trillion won ($4.4 billion) to be used to fund the development of a platform economy in 2019.

The development of various technologies, including blockchain, has been outlined, with the projects set to begin next year. Blockchain technology will be particularly useful in securing data transactions and information sharing.

The government’s five-year plan includes eight pilot projects and a budget of between 9 to 10 trillion won ($8.8 billion).

The Unique South Korean Cryptocurrency Market

The South Korean cryptocurrency market has seen significant growth in the past year and was responsible for a third of all bitcoin trades in 2017, with investors paying “Kimchi premiums”. The term is used to describe the bitcoin pricing gap between the country’s exchanges and that listed on foreign exchanges.

Cryptocurrency prices on the nation’s exchanges are usually higher, with the phenomenon been attributed to the lack of high return investment options in the country. In December 2017, for example, bitcoin rates in South Korean exchanges were over 40 percent higher than those on U.S. markets.

Of course, it seems logical and easy for traders to bank on arbitrage opportunities in such an ecosystem. This could be achieved through currency pair trades interlinked with cryptocurrency purchases in foreign platforms, and then reselling on South Korean exchanges.

Except, it’s not, because of stringent financial regulations, capital controls, and anti-money laundering laws. South Korean companies and individuals face limitations on the amount of money they can send abroad and need to receive approval from regulators. However, the process is likely to be unsuccessful due to money laundering fears.

Unemployment among the youth is another alleged catalyst of the burgeoning cryptocurrency trend in South Korea. It stood at 9.9 percent in 2017. It is estimated that three in ten salaried employees had invested in cryptocurrencies by the end of last year.

This is according to a survey undertaken by the Saramin recruitment agency, a South Korean firm. Eighty percent of these were people in their 20s and 30s.

NEWSLETTER

Newsletter (Sidebar)

  • This field is for validation purposes and should be left unchanged.

RELATED ARTICLES

BlockFi Review: Is BlockFi Safe, Legit, and Worth Your Time? 

With a 6.2% APY on BTC, the BlockFi Interest Account seems like a ray of sunshine for…

Read More
An analysis of LocalBitcoins, however, paints a different picture.

What Triggered the Recent BTC Price Surge, Beyond the Iranian Crisis

Tensions between the U.S. and Iranian administrations are believed to have triggered the most recent BTC price…

Read More
Bitcoin Hillary

How the Bitcoin Blockchain Was Used to Track Down DNC Email Hackers

There are still people out there that believe that bitcoin transactions are anonymous. However, the Bitcoin blockchain…

Read More

NEXT ARTICLE

Getting Started Gold Bars.

NEXT ARTICLE

BlockFi Review: Is BlockFi Safe, Legit, and Worth Your Time? 

With a 6.2% APY on BTC, the BlockFi Interest Account seems like a ray of sunshine for digital asset holders that have grown used to having their holdings slosh around with market volatility. Let’s explore in our BlockFi review.  The BlockFi Interest Account: It allows users to earn competitive compound interest rates on their cryptocurrency…

ABOUT THE AUTHOR

Getting Started Gold Bars.

ABOUT THE AUTHOR

Elizabeth Gail is a crypto-enthusiast and blogger. Her specialties include cryptocurrency news writing and analysis. When not writing about crypto, she’s out taking part in humanitarian endeavors across the world. For any news tips or coverage, you can reach out and engage with her on Twitter at @Lizbarret001. You can also email her at gailelizabeth100 (at) gmail dot com.