No Bitcoin ban in South Korea

Bitcoin is a fickle thing. We know that it is extremely volatile, and unpredictable. Juts like with a short temper, anything could set it off. This was put to the test recently when unsubstantiated claims were made about the currency.

It was incorrectly reported that South Korea would ban Bitcoin and crypto exchanges. The result of these false statements? The trading price of the currency went onto decline. This price drop was part of Bitcoin’s latest price correction, which saw the currency drop from $20k on some exchange to as low as $8k. However, at the time of writing, it was trading at just under $13k.

Reuters was responsible for the misinformation, releasing an article on the 27th of December mentioning the ban. They retracted their words just a couple of hours later. However, the FUD damage was done already, with the currency’s price slipping even further because of the announcement.

So, what’s the right story? South Korea will not be banning Bitcoin or exchanges, but will be disabling any anonymous account on their crypto exchanges. In addition, underaged investors and foreigners will not be able to trade Bitcoin. This was discussed during a state meeting on the 13th of December.

There is a reason for non-foreigner regulations though. A group of Chinese traders had previously laundered millions of dollars through crypto trading. They would buy bitcoins in China, and then exchange them in South Korea for yuan as the price of the currency is 20% more in the country compared to the global average.

With regard to underaged traders, the country’s Prime Minister, Lee Nak-yeon, had previously vocalized his apprehension that children, some young enough to attend middle school, were trading bitcoins.

Stricter regulations also have the aim of combating the risk of investors falling for crypto-based ponzi schemes.

Even though digital currency regulations may have negative connotations associated with it, the crypto community in South Korea actually welcome the latest developments. Bithumb, a Seoul-based exchange and the second-largest one in the world, believes that regulations can stabilize the current market resulting in faster growth:

“A right set of regulations will rather nurture the (virtual currency) market, and we would welcome that.”

South Korea is a crypto hub, accounting for nearly 25% of the global trading volume. Widening the market and providing a solid framework for trading crypto in the country may result in the mainstream adoption of digital currencies sooner than we might think.