South Korea is examining a licensing system to regulate the country’s cryptocurrency exchanges in a major turn around from its previous harsh stance.
A turn around from hardline approach
After announcing less than a month ago that some or all cryptocurrency exchanges may be shut down in the aftermath of the Bitcoin market correction South Korea looks as if it may soften their stance.
According to Business Korea, the government is considering adopting a system similar to New York’s Bitlicense model. The New York system only allows exchanges that applied for a Bitlicense from the state department of financial services to trade cryptocurrency. New York requires detailed reporting regulations and a minimum capital requirement which has limited the number of firms and currencies that qualify.
The South Korean government considers that implementing such a system brings a notoriously volatile market into a more familiar institutional framework which can be more easily supervised. These recent statements are a dramatic reversal to an energetic crackdown on cryptocurrency exchanges last year.
The first mention of a ban by South Korea, one of the top cryptocurrency markets in the world, in December of 2017 caused Bitcoin to slide 18% in one day. Resulting in the chief of financial services commission to talk openly about shuttering cryptocurrency exchanges nationwide in a speech to parliament.
“(The government) is considering both shutting down all local virtual currency exchanges or just the ones who have been violating the law,”
Choi Jong Ku, chief of financial services commission.
This call for tighter regulation sparked a strong reaction as thousands of South Koreans signed a petition to stop any ban on cryptocurrency trading on the website of the presidential blue house.
Creating a path to stable crypto market
This recent reconsideration from the government comes as a great relief to investors both in the country and around the world as South Korea’s policies would affect the international cryptocurrency market.
It seems that the recent stabilization of Bitcoin’s value after it fell dramatically at the end of last year has convinced the government that a safely regulated market is viable.
Or maybe the government realized that an attempted ban on trading would drive cryptocurrency exchanges underground, taking them out of the tax revenue loop as well as alienating South Korea from the developing Blockchain technology expansion and all of the benefits that are sure to come with it.