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South Korea denies crypto ban as China tightens grip on off-the-grid traders

South Korea President Moon Jae-in’s executive office Blue House spokesperson Jeong Ki-joon has recently confirmed that there will not be a cryptocurrency trading ban in the near future. This comes just a month after rumours started circulating about the possibility of a ban by the government.

The regulation taskforce created by the government will have the task of looking into the regulatory possibilities around the cryptocurrency market in order to encourage, not ban, trading.

CCN posted a translation of the statement by Mr Ki-joon: “First, the South Korean government will pursue the crackdown on anonymous cryptocurrency trading accounts and will punish market manipulation, money laundering, and fraudulent transactions through joint investigations participated by the local law enforcement and financial authorities.”

Read more: South Korea bans Bitcoin confiscation as regulation develops

The spokesman added that cryptocurrency trading ban proposal introduced by Justice Minister Park Sang-ki was a just suggestion to bring speculation within the cryptocurrency market under control. The aforementioned taskforce, alongside the Ministry of Strategy and Finance, central bank, Fair Trade Commission, and other agencies, would look into changes to this proposal.

He concluded: “Lastly, excessive speculation and fraudulent activities will be met with severe consequences. But, the government will support and even finance blockchain technology development.”

Undoubtedly, these statements are a result of the negative popular reaction after the rumours of the ban came to light, not only by users, but also by officials in the government, including Nam Kyung-pil, former congressman and a member of the National Assembly.

Read more: Bitcoin to be regulated as commodity in South Korea

“Calling Bitcoin a tulip bubble is ridiculing the South Korean people. It’s a baseless condemnation of the currency. Gov’t should focus on fostering crypto market if it doesn’t want to be left behind,” Kyung-pil said.

South Korea has been investigating and experimenting the different possible regulations on cryptocurrency trading for a while. The ban on foreigners and underaged investors from trading cryptocurrencies is expected to be implemented on January 20, with exchanges accepting new investors and registrations before the end of the month.

China cracks down

South Korea’s neighbours have had a swifter response to the need of cryptocurrency regulation. Bloomberg has recently reported that China’s regulators are looking at ways to regulate internet-based platforms and mobile apps that provide customers with exchange-type services.

This comes after the government made the leap and banned cryptocurrency trading of all types – as well as ICOs – but there was little control over people accessing offshore and homegrown platforms that enable trading.

Rumour has it that he government is also going after companies and individuals who enable cryptocurrency trading by providing services such as market making, settlement and clearing.

Scott Nelson, CEO and chairman, Sweetbridge

IBS Intelligence had a chat about the topic with Scott Nelson, CEO and chairman of Sweetbridge, a global alliance that is leveraging blockchain technology to solve issues of liquidity and resource sharing within supply chains.

Nelson told us that in countries with such cryptocurrency trading activity, such as China or South Korea, it is natural that governments and regulatory bodies are concerned with losing control over the monetary policies and their own currency, in case capital flight through cyptocurrency trading reaches certain levels.

In the case of China, Nelson argues, it is also a matter of monitoring citizen and company activity, to a near-Orwellian degree. Nelson expects that China’s ban eventually fades and gets replaced by a system in which cryptocurrency users lose anonymity when trading – now that cryptocurrency has become mainstream, anonymity is only valued by a very few, not the large consumer majority.

Although security issues may be raised, these are not the main reason why these governments are opting towards this regulatory route. It is control over its own policies and currencies, first and foremost, although for China further interests may be in play. Nelson believes that China might get away with its all-seeing eye in the short term, but the globalising nature of blockchain and cryptocurrencies may complicate things further down the line.


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