Why is usually South Korea Spooking the Global Bitcoin Market?
What might South Korea do?
The country’s justice minister, Park Sang-ki, said This particular week that will his ministry was drawing up a bill that will would likely include the complete shutdown of virtual currency exchanges, adding that will trading from the tokens “has started out to resemble gambling in addition to speculation.”
The most favorite 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 currently, 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 will 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 will different ministries would likely be required to confer on the Justice Ministry’s proposal, Yonhap reported.
Will lawmakers support the idea?
At the very least, a ban would likely not be passed quickly: Securing a majority of votes from the National Assembly could take months.
More to the point, several lawmakers via major parties signaled This particular week that will they would likely 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 will closing the exchanges would likely 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 will criminalizing virtual currencies would likely fly from the face of the administration’s claims to support completely new technologies.
South Korean citizens have also voiced their opposition to a potential clampdown by signing petitions with the president’s office. The most favorite of these has garnered more than 0,000 signatures.
“The power of the individual investor is usually very huge in South Korea,” said Simon Seojoon Kim, chief executive of Hashed, a fund in Seoul that will invests in virtual currency projects.
What prompted the investigations?
The National Tax Service in South Korea declined to comment on why its representatives visited two major virtual currency exchanges, Bithumb in addition to Coinone, This particular week. nevertheless Shin Won-hee, head of operations at Coinone, said the tax authorities had wanted to check that will the company had paid proper corporate tax.
Bithumb told local news outlets that will the idea was cooperating with the investigation.
Separately, the police in Gyeonggi Province, which surrounds Seoul, have been investigating whether Coinone is usually operating “a gambling site.” The company had previously allowed investors to buy in addition to sell virtual currencies on margin — that will is usually, to place bets using borrowed money. nevertheless Mr. Shin said that will Coinone decided in November to stop allowing margin trading as government officials began expressing concerns about market overheating.
Why is usually Bitcoin more expensive in South Korea?
Mr. Park, the justice minister, said This particular week that will the depths of South Korean investors’ irrationality was reflected from the high premium — around 30 percent on Friday — that will they paid on Bitcoin exchanges in South Korea over those elsewhere.
Experts said that will South Korean prices were also higher because the exchanges there did not allow trading by foreigners. that will prevents overseas investors via selling Bitcoin in South Korea to profit via — in addition to thereby help narrow — the cost gap.
South Korea’s isolation via the global market leads investors at home to seek better prices elsewhere. “We are seeing Koreans taking loads of cash to buy Bitcoin in Indonesia in addition to different countries in Southeast Asia where Bitcoin is usually cheaper,” said Hong Ki-hoon, professor of economics at Hongik University in Seoul.
What do investors think?
With so many conflicting signals via the government, “I don’t think any of us think that will these strong measures will actually be implemented,” said Hyon Hae-in, a 35-year-old Bitcoin investor.
“Longtime investors see times like these as opportunities to trade,” she said.
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