Teenagers to middle-aged investors in South Korea are engaging in cryptocurrency trading, investing in bitcoin, Ethereum, Bitcoin Cash, and a wide array of cryptocurrencies and assets.
Government Steps In To Regulate Bitcoin
In the beginning of 2017, the South Korean government, local financial authorities, and the ministry of strategy and finance remained neutral to bitcoin and declined to regulate the space because any sort of regulation would provide legitimacy to the cryptocurrency market.
The South Korean government was hesitant towards regulating bitcoin and business merely 6 months ago because it believed that the imposition of strict regulatory frameworks and policies would further lead the South Korean finance market and general consumers into the bitcoin market.
Since South Korean prime minister Lee Nak-Yeon’s public statement in early November about his concerns over teenagers and students jumping into cryptocurrency trading, the South Korean government has formed a task force operated by the South Korean Ministry of Strategy and Finance, Financial Services Commission, Ministry of Justice, Fair Trade Commission, and Financial Supervisory Commission to create regulations around the cryptocurrency market.
Earlier today, on December 13, leading South Korean cryptocurrency exchange Bithumb noted that the imposition of regulations in the South Korean cryptocurrency market would further legitimize and validate the industry, given the rapid increase of demand from local investors for bitcoin and other cryptocurrencies in the market.
”A right set of regulations will rather nurture the (virtual currency) market, and we would welcome that,” Bithumb told Reuters.
South Korean cryptocurrency trading platforms such as Bithumb, Korbit, and Coinone, which have a daily trading volume that is larger than KOSDAQ, South Korea’s main stock market, are already equipped with well-structured Know Your Customer (KYC) and Anti-Money Laundering (AML) systems.
The rigorous verification and approval process of cryptocurrency trading accounts by the three abovementioned exchanges are well recognized. The exchanges require traders and investors to submit a wide range of documents such as government-issued IDs, proof of income, bank account information and carry out face-to-face interviews.
Why is Government Regulation Necessary?
Middle to high school students, college students, middle-aged investors, and grandparents are investing in bitcoin. As Isaac Chung, a college student turned bitcoin enthusiast told CNN Tech, “First, it was just tech people. Now, literally, everyone is interested in bitcoin.”
In an interview with Nathaniel Poppers of the New York Times, Tony Lyu, the co-founder and CEO at Korbit, the South Korean cryptocurrency market’s third-largest exchange which was recently acquired at a $140 million valuation, emphasized that the South Korean finance sector tends to overheat quickly, as investors desperately move to follow the recent trend.
“Word just spreads really fast in Korea,” said Lyu. “Once people are invested, they want everyone else to join the party. There’s been this huge, almost a community movement around this.”
In South Korea, literally, investors of all ages are starting to invest in bitcoin and the cryptocurrency market, and the demand for cryptocurrencies has reached a point in which the government deemed regulations for cryptocurrency business and investors are necessary.