South Korea Finance Minister: Cryptocurrencies are Necessary For Blockchains to Operate

Kim Dong-yeon, the Finance Minister of South Korea, firmly stated that cryptocurrencies as incentive systems are necessary for public blockchain networks to operate.

“Blockchain technology can disrupt and revolutionize the world. But, for open-source blockchain networks, cryptocurrencies are necessary as incentives for individuals to participate in the network.”

Yeon’s statement was released this week, following the official decision of the government to not ban cryptocurrency trading both in the short and long-term. During a government hearing held on February 1, Yeon further emphasized his stance on cryptocurrencies, when he stated that the South Korean Finance Ministry has no intentions to eliminate cryptocurrencies or strictly restrict them to the point in which cryptocurrencies can no longer be used in the local market.

“The Finance Ministry has no plans or intentions to eliminate or prohibit cryptocurrencies. Blockchain technology is an important technological breakthrough to fuel the fourth industrial revolution and as such, the ministry will take a cautious approach in regulating the cryptocurrency market. For negative use cases of cryptocurrencies, the ministry will impose strict regulations,” added Yeon.

Previously, several government officials and self-proclaimed influential economists in South Korea claimed that blockchain networks can function without cryptocurrencies, and that cryptocurrencies like bitcoin and Ethereum are not necessary. Yoo Shi-min, a popular author and former government official, criticized bitcoin as a gambling tool, stating that the blockchain is a disruptive technology but cryptocurrencies are not.

Jang Jae-seung, a professor at Korea Advanced Institute of Science and Technology (KAIST), the most prestigious technology-focused university in the country, directly refuted the claim of Yoo, noting that without cryptocurrencies serving as incentive systems, public blockchain networks cannot function. Centralized blockchains are not an option as they lack strong security measures, transparency, and most importantly, decentralization.

Minister Kim echoed a similar sentiment to professor Jang, as he explained that mining is a necessary and a crucial system of open-source and public blockchain networks. Without incentives, individuals do not have the motive to contribute to the network and inevitably, the public blockchain will disintegrate.

“It doesn’t apply for centralized or permissioned blockchains but for public blockchain networks, mining is necessary to create blocks and provide incentive to individuals within the network,” said Kim.

Although the South Korean government and the Blue House, the executive office of President Moon Jae-in, reaffirmed on several occasions that the government will not ban cryptocurrency trading, the statement of Finance Minister Kim strongly reasserted the South Korean government’s intention to regulate and foster the market, to protect investors and help businesses grow.

Cryptocurrency exchanges remain optimistic in the long-term growth of the market and their enthusiasm is demonstrated in the entrance of new cryptocurrency trading platforms into the market. Huobi, formerly the largest cryptocurrency exchange in China, has already obtained 150,000 users on its waiting list and it plans to launch its exchange in the first quarter of 2018.


Subscribe to our newsletter

Chinese news reports that two of the country’s largest exchanges have been given an extra month to operate domestically. It appears OKCoin and Huobi will be allowed to continue offering services until October 31, 2017. This corresponded with an instant upswing in crypto markets with Bitcoin alone gaining $400 in just minutes. However, there is yet to be an official announcement from Beijing confirming the extended deadline.

Local news outlet Caixin reports that since OKCoin and Huobi have not performed any ICO operations, they will be allowed to continue offering services.

Meanwhile, OKCoin has issued a statement with regards to the impending regulations facing the industry. The post on their website today confirms the October deadline. In it, they announced the company’s short-term plans and affirmed their commitment to explore and fulfill all regulatory recommendations.

OKCoin’s International Customers to Remain Unaffected

Effective immediately is the suspension of new registrations, and additional deposits in RMB. The post also asserts that all funds deposited on OKCoin is completely safe, thanks to their 100% reserve system. They do however warn that withdrawals might take an abnormally long time, due to congestion. They have thus increased the processing time from 24 hours to 72 hours to account for the extra volume of transactions taking place. In addition, they ask customers to try and use their email support service where possible as queues for telephone support are understandably long. Finally, they reassure customers using services outside of China that they will remain unaffected.

In terms of users still holding coins, OKCoin has said that services will continue as normal. They will provide permanent free storage for users wishing to leave their money and private keys with them. In accordance with anti-money laundering requirements, all coins do need to complete a video verification. The site has imposed a limit of nine days on how long they will accept new video certifications. In order to ensure a smooth experience, it will be offering guidance to the customers on the platform.

Interestingly, the markets have responded quickly to the new developments. The good news, however small, caused a surge in buying of all cryptocurrencies with CoinMarketCap reporting double-figure hourly gains across the many assets and tokens amongst the top 100.

Ref: Ciaxin | OKCoin

Cryptocurrency exchanges always have to keep meeting market demand. In most cases, this means increasing the number of listed currencies. Huobi, one of China’s largest exchanges, plans to introduce Ethereum Classic trading later today. This is a major boon for all ETC users, to say the least. It is not the first platform to recently add ETC trading either, which is rather interesting.

Huobi is one of the leading Chinese exchanges. Even though they may not generate the volume OKCoin.cn does, they are still an important platform. So far, they focus on three main cryptocurrencies, all of which are trading against the Chinese Yuan. Bitcoin, Litecoin, and Ethereum are all supported as we speak. Adding Ethereum Classic to this small and illustrious list is quite interesting, to say the least.

ETC Trading is Coming to Huobi

According to the company statement, ETC trading will go live later today. However, the trading of Ethereum Classic won’t occur until July 13th. Users can deposit funds in anticipation of trading it, though, which is quite interesting.The company feels Ethereum Classic will be a valuable addition to their platform. Considering how so very few currencies are traded there, that is a very bold decision.

Moreover, Ethereum Classic is the only original Ethereum blockchain in existence. It is also the only immutable version of that blockchain. Many people tend to forget this important aspect, for some reason. Providing an untampered history free from external interference is of the utmost importance. Based on that aspect alone, Ethereum Classic should be valued higher than Ethereum is right now. For some reason, things have worked out quite differently.

A few other exchanges have recently enabled ETC trading as well. It is evident there is a global demand for Ethereum Classic right now. Whether or not this is due to the ongoing Ethereum network issues, remains to be seen. It will be interesting to see what effect the Huobi listing will have on the price. It is obvious Ethereum Classic is undervalued, considering it has the same technology as Ethereum. More importantly, it is also immutable, whereas Ethereum isn’t.

Things have started to look bright again for the Chinese cryptocurrency sector. The country’s leading cryptocurrency exchange and trading platforms have begun allowing customers to withdraw Bitcoin from their respective accounts.

The new development comes almost four months after the People’s Bank of China inspected the cryptocurrency platforms in the country. Following the inspection, the central bank issued few guidelines to the exchange platforms, while indicating the introduction of cryptocurrency regulations in the near future. These factors pressed exchanges like BTCC, Huobi, OKCoin and others to limit their offerings and introduce new Know Your Customer (KYC) and Anti-Money Laundering (AML) policies.

Until the new systems were devised, the Chinese cryptocurrency platforms froze Bitcoin withdrawals on all customer accounts. While the suspension lasted, people were still able to execute trades as usual, as long as the cryptocurrencies possessed by the clients never left the platform.

A leading news media agency has reported that BTCC, which recently unfroze Bitcoin withdrawals, did so only after implementing new KYC and AML processes. Other platforms to relax the restrictions include Huobi and OKCoin. The same report also suggests that the resumption of Bitcoin withdrawal was implemented only after receiving clarification from the central bank which mentioned that it is not forbidden.

Customers on BTCC, Huobi, and OKCoin can only withdraw a maximum of 10 BTC per day at the moment. The limits could be further relaxed shortly, restoring normalcy to one of the most prolific cryptocurrency ecosystems in the world.

The actions of People’s Bank of China came amid increased reports of people skirting capital controls through the use of Bitcoin as an alternative investment method. However, despite these self-imposed restrictions by Bitcoin platforms, the Chinese legal tender continues to fall indicating a much serious problem in the economy than cryptocurrency investments.

The positive development in the Chinese Bitcoin sector could influence overall global cryptocurrency sales as well. The Chinese legal tender continues to fall indicating a much serious problem in the economy than increased cryptocurrency investments.

The positive development in the Chinese Bitcoin sector could influence overall global cryptocurrency sales as well.

Ref: Reuters |Image: NewsBTC

Bringing more liquidity to the cryptocurrency market is never a bad idea. Huobi, one of the largest Chinese exchanges, will do exactly that. The company announced Ethereum trading will go live on the platform as of today. This is quite big news for the Ethereum ecosystem. The bigger question is whether the other major Chinese exchanges will follow their lead or not.

An Interesting Decision By Huobi

It has always been rather odd not to see Ethereum on major Chinese exchanges. These platforms tend to focus on Bitcoin first and foremost. However, this situation is coming to change as of today. Huobi is enabling ETH trading on their platform. This makes them the first of the big three exchanges to do exactly that. It is doubtful BTCC and OKCoin will follow this example, though.

To be more specific, BTCC confirmed they will enable Ethereum Classic trading soon. There is still some “bad blood” between Ethereum and Ethereum Classic. The latter is the original blockchain without the contentious DAO bailout fork. The former is the ecosystem with the most media attention and a growing number of use cases. It will be interesting to see how both ecosystems will evolve over time.

The addition of ETH trading to Huobi can be quite eventful. Chinese exchanges generate a lot of volume on a daily basis. Whether or not this means demand for ETH will increase, is anybody’s guess. It is safe to assume more liquidity is a good thing. Having a direct trading market against the Yuan can only mean positive things will happen for Ethereum. A massive price increase should not necessarily be expected, though.

In the end, it is good to see Huobi make a bold decision. Chinese exchanges have lost some of their appeal ever since withdrawals were halted. As a result, both Japanese and Korean trading platforms have leapfrogged China in trading volume. The addition of Ethereum to Huobi and ETC to BTCC could have some interesting results, though. The bigger question is whether or not Huobi will enable ETH withdrawal, or just provide an option to buy Ethereum.

Header image courtesy of Shutterstock

The Chinese regulatory agencies have adopted a hardline stance against the country’s cryptocurrency exchanges. The increasing pressure on Bitcoin platforms to implement compliance measures has forced them to extend the ban on Bitcoin withdrawals indefinitely.

Three main bitcoin exchanges — BTCC, Huobi, and OKCoin simultaneously announced the extension of withdrawal ban in the country. In a previous announcement, they had expressed hopes of resuming normal operations, minus the leveraged trading and lending services by March 15, 2017. Now, with no definite timeline, the Chinese cryptocurrency market is going through uncertain times.

According to a report on one of the business news outlets, the exchanges are going to continue imposing the withdrawal ban, preventing users from accessing their own cryptocurrency until the regulators approve the internal compliance upgrades. The announcement had an effect on Bitcoin’s price, leading to an immediate fall in price, which later recovered after few hours.

The regulatory oversight in the Chinese Bitcoin market came into effect after numerous reports suggested an increased usage of Bitcoin among the population to skirt capital controls. These reports, combined with the country’s slowing economy and falling foreign reserves could have triggered the government agencies to crackdown on cryptocurrency platforms.

Before the crackdown, China was the world’s leading cryptocurrency market. Trading patterns and volumes in the Chinese market played a significant role in affecting the global Bitcoin price. However, following the withdrawal of leveraged trading and lending features, exchange platforms have started to impose trading fees, which has reduced the use of automated trading bots. All these factors, have weakened the country’s influence on Bitcoin price.

The cryptocurrency, driven by speculations and hopes of ETF approval has moved out of China’s sphere of influence. The fact that the Bitcoin price has increased to an all-time high while the Chinese community struggles to withdraw their cryptocurrency balance proves that the digital currency is quite capable of handling itself.

Ref: Bloomberg | Silicon Angle | Image: Shutterstock

Things in the Chinese cryptocurrency market has hit the fan. An inspection of cryptocurrency platforms by the People’s Bank of China to protect investors’ interest has gradually turned into a full-blown war against cryptocurrency.

Emerging reports from various segments of the Chinese cryptocurrency community suggests that the PBOC started taking increased interest in the exchanges by the end of last year. HaoBTC is the latest casualty of the new developments as it announced the decision to stop offering exchange services.

HaoBTC’s decision comes days after its meeting with PBOC officials along the country’s eight other cryptocurrency platforms. However, HaoBTC will continue providing its primary services – mining and online wallet. CnLedger, a leading cryptocurrency and blockchain news channel on Twitter has shared a list of exchanges along with the changes made to their offerings following interaction with the central bank.

The eight other cryptocurrency platforms that participated in the PBOC meeting along with HaoBTC includes CHBTC, BtcTrade, Yunbi, Yuanbao, BTC100, Jubi, BitBays and Dahonghuo. CHBTC has joined the ranks of OKCoin and Huobi after suspending Bitcoin withdrawals for a period of one month. Others have taken a less severe approach by strengthening their withdrawal review and verification process.

HaoBTC, before announcing the closure of its exchange services had hinted about the possibility of an increased deposit fee. The platform had plans of increasing the deposit fee to 5% with the intention of combating pyramid scheme while ensuring enough margins to implement necessary compliance systems as directed by PBOC.

By the end of last week, OKCoin and Huobi had announced their decision to freeze Bitcoin withdrawals from the accounts. Another major Chinese Bitcoin exchange, BTCC announced the introduction of a 72-hour review period before processing bitcoin withdrawals.

READ MORE: OKCoin and Huobi to Freeze Bitcoin Withdrawals, Raises Concerns about Centralized Platforms

The Chinese central bank seems to have come up with restrictive measures for the cryptocurrency industry after numerous reports indicated the use of Bitcoin to circumvent capital controls. All cryptocurrency platforms in the country are expected to strengthen their AML and KYC policies further this month, to satisfy the central bank.

Ref: CnLedger | Image: NewsBTC

Bitcoin is a decentralized currency, but most Bitcoin exchanges aren’t. The drawbacks of such a model are now being witnessed firsthand by the Chinese cryptocurrency community. The leading Bitcoin exchanges in the region, OKCoin and Huobi are planning to stop their customers from withdrawing bitcoin from their respective accounts.

The new measures implemented by two of the country’s big three exchanges follows the increased scrutiny of the Chinese Central Bank to prevent capital outflows. However, BTCC has taken a softer approach by subjecting all withdrawals to a 72-hour review. A leading global news outlet has reported about the meeting between the central bank and nine cryptocurrency exchanges on Wednesday. During the meeting, the People’s Bank of China is said to have warned these exchanges against offering margin lending services and other regulations. If the Bitcoin exchanges in the country were found violating the central bank’s guidelines, they could be forced to shut down their operations.

The nine exchanges that were part of the Wednesday’s meeting with PBOC includes CHBTC, BtcTrade, HaoBTC, Yunbi, Yuanbao, BTC100, Jubi, BitBays and Dahonghuo. Since the beginning of this year, the Chinese central bank has adopted a tough stance against Bitcoin exchanges in the country. PBOC recently conducted spot inspection of BTCC, Huobi, and OKCoin.

The platforms will also further improve their KYC and AML systems to monitor the community’s activity. The increased oversight might discourage a small portion of the community who have until now used Bitcoin to skirt capital controls.

But, the recent announcement made by Huobi and OKCoin serves as an indicator of how centralized exchange platforms can exert control over the activities involving Bitcoin, which is supposed to be free from outside intervention. It will make the cryptocurrency community to seriously consider adopting decentralized exchange platforms instead of traditional Bitcoin exchanges.

Ref: Reuters | Image: NewsBTC

Following the warning issued by China’s central bank to domestic exchanges earlier today, two out of three of China’s most widely used bitcoin exchanges have announced that they will suspend bitcoin and litecoin withdrawals for one month effective immediately.

The move to suspend any bitcoin and litecoin withdrawals appears to be a direct consequence of the closed-door meetings between the PBOC and bitcoin exchanges that happened yesterday and the warning issued earlier today.

Huobi and OKCoin just publicly announced in identical statements that the decision was taken to intercept any “illegal transactions” and fortify their anti-money laundering (AML) efforts. They informed the users that in a bid to ensure their compliance with local financial and money transmission regulations, they were being asked to upgrade their Anti-Money Laundering systems.

The decision to disable withdrawals was abrupt and no warning or notification was issued to the users.

Huobi and OKCoin jointly control approximately 25% of the global Bitcoin exchange market and are two of the largest bitcoin exchanges in China. On a daily basis, the two exchanges process litecoin and bitcoin almost worth 55 million dollars.

As a result, the bitcoin trade in China immediately plunged by 7% and in what is the third major price crash inspired by the PBOC; Bitcoin price nosedived back to below $1000.

The decision is to only prohibit only bitcoin and litecoin withdrawals, and will not have any influence on other services like Yuan recharge, withdrawals etc according to the exchanges.

Both Huobi and OKCoin were earlier criticized by the PBOC for flouting the local regulations by operating cryptocurrency businesses on top of an AML system.

The failure by the two exchanges to address the AML system issue during the preliminary inspection and visits by the PBOC has caused the PBOC to force the two exchanges to temporarily disable withdrawals and operations until the bolstering of the AML is undertaken.

There has been no update from BTCC, the third exchange comprising the ‘Big Three’ domestic exchanges in China.

The Chinese Bitcoin exchanges are making significant changes to their service offering. These changes follow a recent inspection of cryptocurrency platforms carried out by the People’s Bank of China (PBOC).

The latest announcement of such a change comes from OKCoin. In its most recent post, the platform has announced the suspension of margin trading service. The platform’s decision follows the requirements stated by the country’s regulators.

With the suspension of margin trading and borrowing services, OKPay has also decided not to recover the outstanding loans forcibly. However, it welcomes borrowers to settle the debts voluntarily. Once they pay the debts, users will not be able to apply for any new loans.

The regulatory authorities responsible for the inspection and newly-stated requirements include the Shanghai branch of PBOC along with Shanghai Financial Affairs Office and other government agencies. During the investigation, the authorities found few practices to be against the interest of Bitcoin investors and traders. The margin and leveraged trading option is one such feature which combined with the volatile nature of Bitcoin could turn out to be disastrous to few traders.

OKCoin’s complete stop on margin trading comes after the platform decided to reduce the leverage to 1x a few days ago. Also, OKCoin is not the only cryptocurrency to introduce changes. Within minutes of announcing the discontinuation of margin trading, Huobi also made a similar announcement.

Huobi’s notice states that the company, in compliance with the regulatory requirements has stopped offering the leverage option. Those who have already opted for the service and used the corresponding amount won’t be able to renew them.

By putting an end to lending services on Bitcoin platforms, the regulatory bodies believe that they could minimize investor losses. Traders will stop themselves from trading more than they can afford to lose owing to market volatility.

So far, the regulatory bodies have focused on minimizing the risks associated with bitcoin trading in the country. Few platforms are expected to start charging trading fees in the coming days. It will not only allow the digital currency platforms to recover a portion of lost revenues from leveraged trading, but it will also minimize high-frequency trades and in turn Bitcoin’s volatility.

Ref: OKCoin | Huobi | Image: NewsBTC