Bitcoin in South Korea
South Korea has the highest adoption of smartphones in the world with over 80% of young adults using smartphones. Add that to the high-speed internet connection and you have a tech ecosystem that is welcoming of the latest tech trends. Including the hottest trend for them all virtual currencies, mainly bitcoin in South Korea. Prices of cryptocurrencies in South Korea are higher than anywhere else in the world. Hence you have a high volume of cryptocurrency trading and exchanges. However, there has been an equal amount of restrictions and regulations from the Korean government. In order to crack down on the trading and exchanges of cryptocurrencies. This is why everyone is looking to see what happens in regards to regulations in South Korea.
Why Regulate Bitcoin?
Many Koreans are asking why the Korean government is looking to regulate cryptocurrencies and bitcoin. The innovation that can come from a free market in regards to not only bitcoin but all forms of cryptocurrencies is limitless. The more government involvement will stifle innovation. There is this black cloud regarding bitcoin. Many people think it is used primarily for gambling and illegal activities online. While that may be the case, there are a lot of benefits in regards to remittance and Fintech. This can change the digital payment industry not only in Korea but all over the world.
The Fall of Bitcoin
The moment news came out that the Korean government said regulators were setting up legislation to stop cryptocurrency exchanges, the price of bitcoin dropped from an all-time high of 21 million won to 11 million won in a matter of days. The public was in an uproar and there has been an online petition that currently has over 210,000 signatures against this form of legislation. It got to the point that the site actually went down due to heavy traffic.
Wait and See
Now the Korean government is in a tough situation. South Korean President Moon Jae-in got a lot of bad press due to the THAAD incident in 2016, which is just starting to recover. This incident regarding virtual currency could be another blow to a Korean government that is looking to show the public that they are looking to stimulate the economy. As of this moment, the Korean government is in a holding pattern in regards to regulation. They are using a wait and see approach before they act officially.
There are experts in the cryptocurrency space that see bitcoin and other forms of virtual currency as a kind of bubble that is ready to burst. That could be devastating to South Korea who seems to be going all in on cryptocurrency, bitcoin especially. If these exchanges continue and South Korea dominates the bitcoin market and bitcoin crashes…that could be deadly to the Korean economy.
The Korean economy is really struggling at the moment. History shows that the best way to create jobs is through entrepreneurship NOT regulation. A free market is the only way to go. Korea has become the powerhouse that it is because of the free market. It seems the Korean government is too afraid of such a new industry that they don’t know what to do. Koreans investing in cryptocurrencies is a good thing. The Korean government can not worry about the future because no one really can predict the future.
South Korea could be following the model set by the Chinese government who shut down crypto exchanges late last year. China was a huge trader in cryptocurrency and South Korea is not too far behind by accounting for 15% of the trading. This is why the world is looking at what the Korean government will do in regards to crypto exchange. If South Korea follows China than other countries might follow leading to the end of cryptocurrency innovation.