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The chairman of South Korea’s Financial Services Commission has just come out with a statement affirming that exchanges can expect their relationships with banks to resume shortly. This comes as a sign of relief to many in the cryptocurrency space since South Korea has been on a dangerous, anti-blockchain path that could have set the space back years if continued.
Cutting off their public funding, the South Korean government in the past few months has expressed some hesitation when dealing with the new space. Currently, blockchain-related firms cannot receive grant money as most start-ups can in South Korea. There were also concerns over potential banking usages with cryptocurrencies exchanges to be banned, but it seems that the state is looking to merely clarify its existing laws.
The chairman, Choi Jong-Ku, clarified his comments today by saying that cryptocurrency exchanges have nothing to fear. As long as proper, basic anti-money-laundering (AML) safeguards are in effect, and there exists basic procedures for know-your-customer (KYC), then cryptocurrency exchanges can expect to get banking support without issue.
This increased scrutiny is likely over the fact that South Korean banks previously offered ‘anonymous’ online banking services to some cryptocurrency exchanges. This is partly why some exchanges, like Bithumb, were raided this early year by the state to investigate whether or not they were being honest with their holdings. Although no real charges were ever filed during these investigations of cryptocurrency exchanges, the South Korean state did establish more stringent AML rules in January of this year. These strict AML rules required that all accounts be linked to a “real name” on cryptocurrency exchanges; banks were also told to stop providing virtual accounts to individuals without clear, verified identities.
Jong-Ku addressed this concern in particular in his statements, saying that this banking provision is the reason AML was introduced. However, as long as banks’ virtual accounts still represent real identity, then there is “no problem.”
Room for Optimism?
South Korea opened this year with some bad news for the cryptocurrency space. There has been a string of crackdowns on various cryptocurrency exchanges and many were wondering what the longevity of blockchain-related development is in South Korea. Some exchanges, such as Upbit, found the mounting legal pressure forcing them to relocate, which they did.
Now, a year after South Korea banned ICOs in the country, there is now a pause. And the South Korean government is looking to change some of its existing cryptocurrency laws to better fine-tune them.
However, even this slight loosening of the unfair restrictions on the cryptocurrency space has been met with some optimism. The South Korean Blockchain Association, for example, has said that some of the legal hindrances for employment in the blockchain space has been lifted. There must exist a stable base so that customers’ money is protected.
Given that cryptocurrency is big in South Korea, the move was much-deserved. The country has been at the top of cryptocurrency trading volume for some time, and the hype peaked around late 2017, just around the time the country banned ICOs. Since then, there has been a decline, but the regulatory framework was too suffocating for anyone to develop their projects. The blockchain community in South Korea stalled, but now, with more recent positive outlook, we can expect some good changes to follow.
Trading Volume Increase
Commentators have noticed that in light of the recent good news for cryptocurrencies in South Korea, trading volume in the country has spiked significantly. The BTC/KRW on most exchanges almost doubled, although the price has remain stagnant. Currently, the Korean Won remains the leading fiat currency by volume trading against Bitcoin, closely followed by Tether.
At one point, the Japanese Yen topped the trading charts in volume, but many investors seem to be flocking to South Korea as a potential haven given that the regulatory framework is changing so quickly. This year, Japan was subject to some of the worst hacks in cryptocurrency history, where exchanges lost hundreds upon hundreds of millions of dollars.
With optimism high in South Korea and KRW-based trading volume on the rise, it seems that South Korea is back on the map for the cryptocurrency world. And given what meteoric rise in volume they produced last year, we can expect another wave of trading volume from the country sometime in the future.