It has been the cause of much consternation in the cryptocurrency markets over the past week. News that South Korea may be banning cryptocurrency exchanges have driven the price of all cryptocoins to monthly lows.
However, it seems as if most of these swings were based more on rumour and conjecture than on fact. Today, the finance minister of South Korea has come out and officially stated that no such ban is in the works.
He said that their focus will mostly be on regulating the current exchanges and making sure that they are effectively carrying out KYC on their traders. In a statement made to Reuters today, the Finance minister, Kim Dong-yeon said:
There is no intention to ban or suppress cryptocurrency (market).
This is no doubt a welcomed stance given the weeks of conflicting reports that were coming from the various different governmental agencies. Given that the ministry of finance is in charge of financial regulations, one can say it is hearing the word from the horse’s mouth.
Anger Prompted Response
So entrenched in society is the notion of cryptocurrency trading that when news of a potential ban started to make the rounds, the community was up in arms. There was an online petition that was circulated and signed by over 200,000 signatures.
Many feared that the regulators would follow the chinese example with the exchange closures. Indeed, the South Koreans have followed the Chinese when they decided to outlaw ICOs (Initial Coin Offerings) in the country last year.
Although the ministry of justice was the first one to suggest a ban on cryptocurrencies trading, this was not co-ordinated with the other branches of government. Moreover, it was unlikely to have succeeded from the beginning as these agencies did not see a need for it.
There were further positive comments that were made this month by the country's competition regulator, Kim Sang-Joo. He thought that the notion of a ban would be anti-competitive and illegal for the government to actually enforce. He stated
[Shutting down cryptocurrency exchanges] is not realistically possible. Based on electronic commerce law, the government does not have the authority to close down cryptocurrency trading platforms
Other Positive News
Further news in support of Bitcoin in South Korea came from the Suwon District Court. There was an ongoing case in which the authorities had seized 191 Bitcoin from a man who was running an illegal pornography site in the country.
The case was on whether digital currency such as Bitcoin could be considered to have “any economic value”. In September last year the judge ruled that it did not and hence that they could not be sezied by the government. This obviously had the effect of slightly delegitimizing Bitcon in the eyes of the South Korean courts.
However, the ruling today by the judge shows that the coins do indeed have an Economic value they can be changed and traded. The Judge stated that:
Bitcoin can be changed into money through an exchange. It can be used as a means of payment through merchants, so it should be regarded as having economic value
Not only does this mean that Bitcoin has more legitimacy from a legal standpoint, it also means that the government will be benefitting from the seizure. The Bitcoin will be sent to an account at the national treasury which will be used for the budget.
It will a lot harder for the country to ban cryptocurrencies and trading if they have actively seized and exchanged the coins as a state entity. Hence, the likelihood of any ban is even less remote.
Hopeful Recovery
Many traders are looking to this good news coming out of South Korea as a possible impetus for a rally in cryptocurrency. Unfortunately, news of the tether and Bitfinex subpoena has dogged the markets recently.
There is hope, however, that the eventual launch of cryptocurrencies on the popular trading application, Robinhood, could drive further demand across the markets. Add to this the relief from the South Korean markets and you have the right ingredients for a rally.
Featured Image via Fotolia
