As the South Korean government backtracks over a proposed ban, global markets are watching as it becomes a beacon for the shape of cryptocurrency in the year ahead. It’s a bubbling hotbed for a generational schism: on one side, a new emerging population of digital- savvy investors that sees cryptocurrency as a way to a better life; on the other, governments and authorities that move to regulate these assets to curb dangerous behaviour around virtual currencies.
Strong statements and uproars
Earlier this week, South Korean Justice minister Park Sang-Ki, temporarily sent Bitcoin plummeting and caused shockwaves across virtual currencies when he said the government was preparing a ban on cryptocurrency trading.
This announcement caused a stir within the country to protest in response. As of Friday, a petition opposing the move has seen more than 120,000 signatures on the presidential Blue House website. The overload of traffic lead the website to crash briefly. This backlash puts the government in a tight spot and the presidential office was quick to issue a response softening its stance on the issue.
“All government ministries agree on the need for a government response to an overheating in cryptocurrency speculation and for a degree of regulation,” Minister for Strategy and finance, Kim Dong-Yeon told reporters.
“The issue of banning exchanges that the justice minister talked about yesterday is a proposal by the Justice Ministry and it needs more coordination among ministries,” Kim added.
Regulators are playing catch-up
South Korea is responsible for 20% of the global bitcoin trade, making it the third largest market in the world after Japan and the U.S. Therefore such a ban would have big ramifications for its population as well as for the global crypto market.
Dave Chapman, managing director at Hong Kong-based commodities and digital assets trading house Octagon Strategy, said: “Given the acceptance of cryptocurrency as a whole, and now its further adoption, and the appreciation of the entire market, it’s hardly surprising to think that regulators are looking at this with some scrutiny.”
For Chapman, it’s only natural for regulators to begin to approach the cryptocurrency space with attention as its expansion has been unusual fast, to say the least. “From a regulator’s perspective, they are trying to do the right thing. It’s about consumer protection and given that the heightened sort of fever in this asset class, it is right that they’re looking into this further,” he said.
A troubled youth
With an increasing digital-savvy younger generation who are quick to adopt the latest technologies and facing hardening prospects in the workplace, South Korea has been a receptive space for the booming cryptocurrency market. For many struggling with uncertain and turbulent futures, investing in bitcoin and its rivals represents the path to a better life. Young people have been quick to defend cryptocurrencies with some even writing on the Blue House website: “Tax it as much as you want but don’t shut it down. My life depends on it”.
With youth unemployment rate nearly 3 times the national average and a widening economic divide, many young Koreans are seeing trading and investing in cryptocurrency as a way out from conventional socio-economic constraints. This has been met with concern and criticism from the older population who warn young people not to be lured into ‘scams’ and advise caution with things that grow too fast.
These fears and growing schisms can be echoed elsewhere globally with cryptocurrency representing a ‘way out’ of traditional economic and social confines. The ripple-on effect being the booming cryptocurrency market attracting a slew of new would-be investors.
The push for tighter control and the handling of the fate of digital currency in South Korea is a fault line for the world to observe and may indeed shed some light into the future of Bitcoin for the rest of 2018.