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Author Topic: [2018-01-13] Why is South Korea spooking the global bitcoin market?  (Read 65 times)
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January 13, 2018, 09:56:33 PM
 #1

SEOUL — The world of bitcoin — rarely free of wild ups and downs of late — has been rattled this week by word that South Korea is preparing a ban on trading in virtual currencies.

The question is how real that threat might be.

South Koreans have taken to digital tokens with fervour. The worldwide virtual currency boom that started last year has swept up savers young and old in South Korea, helping push up global prices.

The government has expressed alarm. Officials, including the prime minister, have voiced concerns about an irrational frenzy. Raids by South Korean tax officials on digital currency exchanges this week have added to unease among investors.

"I am so nervous," said Kim Su-jin, a 50-year-old investor in bitcoin and other virtual currencies who works as a bookkeeper at a women's clothing store in Seoul. "My coins could become trash if the government closes the exchanges."

But South Korea does not appear to be done with cryptocurrencies quite yet. Several political leaders have already aired their opposition to a ban on bitcoin trades, indicating that the public enthusiasm for virtual currencies just might be strong enough to shield them from further government intervention.

WHAT MIGHT SOUTH KOREA DO?

The country's justice minister, Park Sang-ki, said this week that his ministry was drawing up a bill that would include the complete shutdown of virtual currency exchanges, adding that trading in the tokens "has started to resemble gambling and speculation."

The most popular bitcoin exchanges in South Korea process hundreds of millions of dollars' worth of transactions every day. Trades using the Korean won account for around 5 per cent of the volume of bitcoin trades globally.

WILL THE GOVERNMENT PURSUE A BAN?

For now, authorities do not appear to be of one mind on the subject. After Mr Park's comments Thursday, a spokesman for President Moon Jae-in clarified that the Justice Ministry's plan was not final, according to the Yonhap news agency.

Then, on Friday (Jan 12), Kim Dong-yeon, the finance minister, emphasised that other ministries would be expected to confer on the Justice Ministry's proposal, Yonhap reported.

WILL LAWMAKERS SUPPORT IT?

At the very least, a ban would not be passed quickly: Securing a majority of votes in the National Assembly could take months.

More to the point, several lawmakers from major parties signalled this week that they would not support a crackdown. Park Young-sun, a member of the governing party who has no relation to the justice minister, wrote on her Facebook page that closing the exchanges would be like "setting fire to a straw-roofed house to catch a bedbug." Ha Tae-kyung, a legislator with the opposition Bareun Party, wrote on Facebook that criminaliSing virtual currencies would fly in the face of the administration's claims to support new technologies.

South Korean citizens have also voiced their opposition to a potential clampdown by signing petitions with the president's office. The most popular of these has garnered more than 120,000 signatures.

"The power of the individual investor is very huge in South Korea," said Simon Seojoon Kim, chief executive of Hashed, a fund in Seoul that invests in virtual currency projects.

WHAT PROMPTED THE INVESTIGATIONS?

The National Tax Service in South Korea declined to comment on why its representatives visited two major virtual currency exchanges, Bithumb and Coinone, this week. But Shin Won-hee, head of operations at Coinone, said tax authorities had wanted to check that the company had paid proper corporate tax.

Bithumb told local news outlets that it was cooperating with the investigation.

Separately, police in Gyeonggi province, which surrounds Seoul, have been investigating whether Coinone is operating "a gambling site." The company had previously allowed investors to buy and sell virtual currencies on margin — that is, to place bets using borrowed money. But Mr Shin said that Coinone decided in November to stop allowing margin trading as government officials began expressing concerns about market overheating.

WHY IS BITCOIN MORE EXPENSIVE IN SOUTH KOREA?

Mr Park, the justice minister, said this week that the depths of South Korean investors' irrationality was reflected in the high premium — around 30 per cent on Friday — that they paid on bitcoin exchanges in South Korea over those elsewhere.

Experts said that South Korean prices were also higher because the exchanges there did not allow trading by foreigners. That prevents overseas investors from selling bitcoin in South Korea to profit from — and thereby help narrow — the price gap.

South Korea's isolation from the global market leads investors at home to seek better prices elsewhere. "We are seeing Koreans taking loads of cash to buy bitcoin in Indonesia and other countries in Southeast Asia where bitcoin is cheaper," said Hong Ki-hoon, professor of economics at Hongik University in Seoul.

WHAT DO INVESTORS THINK?

With so many conflicting signals from the government, "I don't think any of us think that these strong measures will actually be implemented," said Hyon Hae-in, a 35-year-old bitcoin investor.

"Longtime investors see times like these as opportunities to trade," she said. THE NEW YORK TIMES
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January 14, 2018, 02:17:15 PM
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SEOUL — The world of bitcoin — rarely free of wild ups and downs of late — has been rattled this week by word that South Korea is preparing a ban on trading in virtual currencies.

The question is how real that threat might be.

South Koreans have taken to digital tokens with fervour. The worldwide virtual currency boom that started last year has swept up savers young and old in South Korea, helping push up global prices.

The government has expressed alarm. Officials, including the prime minister, have voiced concerns about an irrational frenzy. Raids by South Korean tax officials on digital currency exchanges this week have added to unease among investors.

"I am so nervous," said Kim Su-jin, a 50-year-old investor in bitcoin and other virtual currencies who works as a bookkeeper at a women's clothing store in Seoul. "My coins could become trash if the government closes the exchanges."

But South Korea does not appear to be done with cryptocurrencies quite yet. Several political leaders have already aired their opposition to a ban on bitcoin trades, indicating that the public enthusiasm for virtual currencies just might be strong enough to shield them from further government intervention.

WHAT MIGHT SOUTH KOREA DO?

The country's justice minister, Park Sang-ki, said this week that his ministry was drawing up a bill that would include the complete shutdown of virtual currency exchanges, adding that trading in the tokens "has started to resemble gambling and speculation."

The most popular bitcoin exchanges in South Korea process hundreds of millions of dollars' worth of transactions every day. Trades using the Korean won account for around 5 per cent of the volume of bitcoin trades globally.

WILL THE GOVERNMENT PURSUE A BAN?

For now, authorities do not appear to be of one mind on the subject. After Mr Park's comments Thursday, a spokesman for President Moon Jae-in clarified that the Justice Ministry's plan was not final, according to the Yonhap news agency.

Then, on Friday (Jan 12), Kim Dong-yeon, the finance minister, emphasised that other ministries would be expected to confer on the Justice Ministry's proposal, Yonhap reported.

WILL LAWMAKERS SUPPORT IT?

At the very least, a ban would not be passed quickly: Securing a majority of votes in the National Assembly could take months.

More to the point, several lawmakers from major parties signalled this week that they would not support a crackdown. Park Young-sun, a member of the governing party who has no relation to the justice minister, wrote on her Facebook page that closing the exchanges would be like "setting fire to a straw-roofed house to catch a bedbug." Ha Tae-kyung, a legislator with the opposition Bareun Party, wrote on Facebook that criminaliSing virtual currencies would fly in the face of the administration's claims to support new technologies.

South Korean citizens have also voiced their opposition to a potential clampdown by signing petitions with the president's office. The most popular of these has garnered more than 120,000 signatures.

"The power of the individual investor is very huge in South Korea," said Simon Seojoon Kim, chief executive of Hashed, a fund in Seoul that invests in virtual currency projects.

WHAT PROMPTED THE INVESTIGATIONS?

The National Tax Service in South Korea declined to comment on why its representatives visited two major virtual currency exchanges, Bithumb and Coinone, this week. But Shin Won-hee, head of operations at Coinone, said tax authorities had wanted to check that the company had paid proper corporate tax.

Bithumb told local news outlets that it was cooperating with the investigation.

Separately, police in Gyeonggi province, which surrounds Seoul, have been investigating whether Coinone is operating "a gambling site." The company had previously allowed investors to buy and sell virtual currencies on margin — that is, to place bets using borrowed money. But Mr Shin said that Coinone decided in November to stop allowing margin trading as government officials began expressing concerns about market overheating.

WHY IS BITCOIN MORE EXPENSIVE IN SOUTH KOREA?

Mr Park, the justice minister, said this week that the depths of South Korean investors' irrationality was reflected in the high premium — around 30 per cent on Friday — that they paid on bitcoin exchanges in South Korea over those elsewhere.

Experts said that South Korean prices were also higher because the exchanges there did not allow trading by foreigners. That prevents overseas investors from selling bitcoin in South Korea to profit from — and thereby help narrow — the price gap.

South Korea's isolation from the global market leads investors at home to seek better prices elsewhere. "We are seeing Koreans taking loads of cash to buy bitcoin in Indonesia and other countries in Southeast Asia where bitcoin is cheaper," said Hong Ki-hoon, professor of economics at Hongik University in Seoul.

WHAT DO INVESTORS THINK?

With so many conflicting signals from the government, "I don't think any of us think that these strong measures will actually be implemented," said Hyon Hae-in, a 35-year-old bitcoin investor.

"Longtime investors see times like these as opportunities to trade," she said. THE NEW YORK TIMES
Source


Well I think maybe because the Korean government would want to get a general survey through public clamor when they release categorical statements about their take on the proliferation of Bitcoin. They know that when they release an official statement, they can very well assess as to how the public will react to it. Through the public's reaction, they will know their next move. That is why as for me, I think the Korean government made a very smart move. Getting to know the public's reaction will give you a glimpse of how strong or weak the market of Bitcoin is.
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January 14, 2018, 07:34:43 PM
 #3

All the South Korean please kindly stand up against the ban and fight back. Show that you care and the govt must do what is beneficial to the long term technological development of your country.

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January 14, 2018, 11:06:25 PM
 #4

Because they are an enemy of China and their vassal North Korea.  Also, not on the best terms with Japan, who is TOTALLY embracing Bitcoin.
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January 15, 2018, 12:51:33 AM
 #5

It is all FUD. China which was the largest bitcoin market also said it would ban all cryptocoins. I am not sure what the present regulatory situation is over there, but bitcoin is still around and it is unstoppable.

If South Korea decides to ban bitcoin then we might see it crash, but I am also confident that we will see it come back and reach new highs too. Do not worry everyone. Bitcoin always finds a way.

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January 15, 2018, 01:00:18 AM
 #6

Interesting to see how this plays out in a democratic nation. China was in the bag as soon as they decided. This'll be different.

However all of this uncertainty has been caused by the stunning irresponsibility of the people running exchanges there. They're utter morons not to have voluntarily sought some type of regulation many, many years ago.

The South Korean market is basically completely unregulated as is.

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January 15, 2018, 03:05:05 AM
 #7

Local economical interests, they want to keep control of their nation and population

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January 15, 2018, 10:18:51 PM
 #8

"There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,"
— Park Sang-ki, South Korean Minister of Justice
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January 16, 2018, 12:52:49 AM
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Local economical interests, they want to keep control of their nation and population

Not only that, and also their financial system. With bitcoin, they already know that they are losing control. Ponder on it, if there was a good outlet for civil disobedience it would be to keep using bitcoin and other cryptocoins.

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January 16, 2018, 04:21:35 AM
 #10

If their cryptocurrency exchange are isolated from foreigners and other foreign exchanges then I don't see any connections why Bitcoin wholly in the global market is affected. Except for one thing and that is of course they used the news to create fear in the market that causes a panic selling of global investors in order to push the price down. Many people right now are taking advantage of the cheap price of Bitcoin and may soon recover from this price dump. These kinds of news are being use usually as a price driver whether up or down.

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January 16, 2018, 06:45:12 AM
 #11

That's the example, if a country government decides to take action on cryptocurrency market (it's definitely not cool at all) However, there's nothing we can do much, but need to abide and follow those rules and regulations set by local government...

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January 16, 2018, 07:09:26 AM
 #12

Here is an article from google newsstand
 https://newsstand.google.com/articles/CAIiEGg32sXw2KMEgdJ35RCSAY0qGQgEKhAIACoHCAow9935CjCe0eYCMObkzAU
The headline suggests that Bitcoin and Ethereum have plumeted  Roll Eyes as s.korea decides on a complete shut down.....
We have seen this before with china and we have seen tge panic
selling too. I still dont know how actually a ciuntry can prevent
its cutizens from having crypto, am i nieve?
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