Why Is South Korea Spooking the Global Bitcoin Market?

What might South Korea do?

The country’s justice minister, Park Sang-ki, said this week that his ministry was drawing up a bill that would include the complete shutdown of virtual currency exchanges, adding that trading in the tokens “has started to resemble gambling and speculation.”

The most popular Bitcoin exchanges in South Korea process hundreds of millions of dollars’ worth of transactions every day. Trades using the Korean won account for around 5 percent of the volume of Bitcoin trades globally.

Will the government pursue a ban?

For now, the authorities do not appear to be of one mind on the subject. After Mr. Park’s comments on Thursday, a spokesman for President Moon Jae-in clarified that the Justice Ministry’s plan was not final, according to the Yonhap news agency.

Then, on Friday, Kim Dong-yeon, the finance minister, emphasized that other ministries would be expected to confer on the Justice Ministry’s proposal, Yonhap reported.

Will lawmakers support it?

At the very least, a ban would not be passed quickly: Securing a majority of votes in the National Assembly could take months.

More to the point, several lawmakers from major parties signaled this week that they would not support a crackdown. Park Young-sun, a member of the governing party who has no relation to the justice minister, wrote on her Facebook page that closing the exchanges would be like “setting fire to a straw-roofed house to catch a bedbug.” Ha Tae-kyung, a legislator with the opposition Bareun Party, wrote on Facebook that criminalizing virtual currencies would fly in the face of the administration’s claims to support new technologies.

South Korean citizens have also voiced their opposition to a potential clampdown by signing petitions with the president’s office. The most popular of these has garnered more than 120,000 signatures.

“The power of the individual investor is very huge in South Korea,” said Simon Seojoon Kim, chief executive of Hashed, a fund…

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