Bitcoin has enjoyed tremendous levels of popularity in Q2 2017, driven largely by sentiment in financial markets vis-à-vis blockchain technology. On 3 July 2017, a member of South Korea’s ruling Democratic Party, Park Yong-jin announced that the government would be stepping in to fully regulate BTC. This serves as a watershed moment for the cryptocurrency, and it will certainly prop up the legitimacy of BTC trading for one of the world’s most technologically advanced markets. The South Korean authorities will be establishing a structural framework to facilitate the trading of BTC.
Regulation ensures that BTC will receive official status as a financial instrument, for deposits, withdrawals and transfers. Individuals and businesses will be able to defer to the regulatory framework when it comes to Bitcoin transactions, thereby formalizing what has heretofore been an unregulated, unchecked and independent financial asset. The requirements laid out by the South Korean government stipulate that trading platforms offering BTC should hold a minimum of $436,000 in capital resources, in addition to comprehensive AML measures (anti-money laundering) and KYC (know your customer) protocols.
Over the past few weeks, the Bitcoin debate in South Korea has resulted in the introduction of multiple legal frameworks to regulate the industry. Presently, the BTC industry is unregulated, but the cryptocurrency is on the cusp of a major upgrade to fully regulated status. The 500 million Korean won requirement is designed to safeguard traders and companies from malfeasance, misconduct and online fraud. By providing a ‘capital cushion’, the industry can operate with a degree of confidence, similar to the requirements set out by the Federal Reserve Bank and US banks in respect of ‘stress tests’ and ‘capital requirements’.
FinTech companies in South Korea have been buoyed by the latest news of regulatory approval for cryptocurrency trading in the country. Pending approval for BTC trading is a step in the right direction for Bitcoin, but BTC service providers have already received approval. The Financial Supervisory Service has been asked to legalize BTC trading in South Korea. Now that this cryptocurrency is accepted as an official remittance option, South Korea joins the Philippines (legalized BTC on 12 February 2017) as a major Asian nation, and power broker in high-tech transactions processing, that has already done so.
Presently, regulations allow for the processing of $20,000 in BTC for clients. This presents a major opportunity to buyers of the digital currency, especially when the South Korean Bitcoin exchange market kicks into high gear. Strong growth is expected, well beyond the $3,000 high that BTC hit in recent weeks. According to sources, the Bitcoin exchange market in South Korea is responsible for the processing of 14% of all trades in BTC. It ranks at position 3 behind Japan and the United States as the top BTC trading country.
Southeast Asia, which is home to an estimated 650 million people is also a region with a largely underdeveloped payment and banking system. Fortunately, the rapid rise of cryptocurrency, notably BTC, may fill that void. The Philippines, Indonesia and South Korea are already moving swiftly towards the widespread adoption of Bitcoin as an alternative to traditional currencies. Indonesia already boasts a large and developed Bitcoin exchange, alongside the Philippines. Asia is a region that has rapidly adopted BTC, and countries like Laos and Vietnam are also on the cusp of accepting this alternative to fiat currency.
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Last modified: March 4, 2021 4:58 PM