South Korean Government Re-Cooling on Crypto

Bitcoin’s rebound is worrying South Korea’s government.

Officials spent much of a pan-governmental meeting last week talking about the rising price of Bitcoin and the dangers of an “overheated” cryptocurrency market.

“The participants, including officials from the Ministry of Economy and Finance, the Justice Ministry and the Financial Services Commission, vowed to closely monitor local cryptocurrency exchanges and take action to minimize the ramifications on investors should the market rapidly overheat.

They also plan to take stern action on potential fraud by working with law enforcement authorities and the financial watchdog.”

Minister of the Office for Government Policy Coordination Noh Hyeong-ouk told the meeting that cryptocurrency wasn’t legal tender and that nobody could guarantee its value. He warned that crypto’s price could dramatically fluctuate in accordance with illegal activity, speculative demand and changes in the local and international regulatory environment, leading to losses.

His main message: think twice before investing in cryptocurrency, and do so at your own risk.

He also called for the swift passage of a legal revision that would prevent using cryptocurrency for money laundering.

A Korean-language article at Bridge Economy contrasts Korean officialdom’s attitude towards crypto assets with that of other countries, particularly Japan.

Tokyo, the article notes, is bringing cryptocurrency into the regulatory fold. It may even be setting the global standard in this regard.

The Korean government, on the other hand, remains hostile to cryptocurrency. Bridge Economy notes that the revision to the Financial Information Act currently mired in Korea’s parliament doesn’t create a licensing system for cryptocurrency exchanges or permit ICOs. Instead, it focuses only on illegal activity, namely, money laundering. And in January, the very same Office for Government Policy Coordination that just warned Koreans against investing in crypto said most of the ICOs carried out overseas by local companies were little more than speculation. Not exactly inspiring.

An official from the cryptocurrency agency told Bridge Economy that Korea and China were unique in their strong opposition to cryptocurrency. In China, you could understand the hostility given the threat that decentralized cryptocurrencies could pose to the Chinese Communist Party’s one party state, the official said. Korea, on the other hand, has no such excuse, especially considering global trends.

The official warned that if Japan and the United States face off for control over the global cryptocurrency market — and the rest of the world takes part — the Korean government would have no choice but to recognize the value of the industry. If the government really wants to cultivate blockchain technology, the official said, then it should change its tenor.

One can’t take an overly dim view of Korea’s regulatory regime, though. As we’ve noted before, Korea is well on its way to becoming a major player in the global blockchain space, government skepticism regarding cryptocurrency notwithstanding. Likening Seoul’s less-than-enthusiastic embrace of cryptocurrency to China might be a bit unfair, too. Korea is still the world’s third-largest crypto market behind the United States and Japan, whereas China has outright banned cryptocurrency trading. And besides, complaining about overregulation in the blockchain space is hardly a Korean phenomenon…