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- Expects cryptocurrencies trade to surge
- Vows to monitor crypto transactions more closely.
- Local Banks also express concerns with the present setup.
The South Korean Central Bank joins the chorus of a long list of Central Banks across the globe expressing concern at the burgeoning cryptocurrency trade. Bank of Korea’s Lee Ju-yeol identified cryptocurrency as a disruptive new financial order with grave implications for the nation’s financial system, he added.
Minimum regulatory control
Cryptocurrency and its highly decentralized blockchain setup have minimal regulatory control. It, according to Lee Ju-yeol, puts the entire present financial order at risk. Coupled with the highly volatile nature of trading will have a counterproductive effect on the well-entrenched and tried economic order. Lee was interacting with the media and informed them that he would begin an exhaustive analysis of all institutions which deal in cryptocurrencies. The Central Bank will also work closely with the burgeoning crypto trade.
South Korea, like China, was never comfortable with the cryptocurrency platform. In 2020, the South Korean government proposed a 20% tax on income generated by transactions involving crypto assets. More than 200 crypto exchanges in South Korea are finding it increasingly difficult to transact routine business. It is gearing up to meet all the stipulations of the regulatory authority in what could be described as one of the biggest shakeups of one of the biggest cryptocurrency markets.
At present, any Korean cryptocurrency exchange will have to partner with local banks to open real-name bank accounts of investors. However, local banks contend that such a setup will make them vulnerable to any money laundering in digital currencies.
September 24 as the deadline to apply the new regulations
The Financial Services Commission has set September 24 as the deadline to use the new rules, and only a few exchanges are believed to comply. It is also a sign that there is enormous pressure from thousands of crypto exchanges that have sprung up worldwide as the nations tighten regulations on the crypto trade.
Four big exchanges control the cryptocurrency trade in South Korea
- Upbit
- Bithumb
- Korbit
- Coinone.
All the four exchanges mentioned above have links with big local banks. However, the new regulations will have crippling effects on the smaller exchanges facing an existential crisis. Colgate, the fifth largest exchange chief Lee Chul-ie said that the government is favoring the big players.
Crypto trade outstrips three times the daily volume of stock trading by retail investors.
The daily turnover of cryptocurrency is touching $20bn at local exchanges. It is three times the daily volume of stock trading by retail investors in the country. The government is noticeably concerned since it is a largely unregulated marketplace. Hence regulators are planning to crackdown to stop illegal activity involving virtual assets.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
