After South Korea’s regulators announced their emergency measures for cryptocurrencies, the bitcoin market breathes a sigh of relief. While a blanket ban was not adopted, other smaller bans remain and a clampdown on virtual bank accounts is presenting a serious challenge to exchanges.
Also read: South Korea Clarifies Position After Reports of Possible Ban on All Crypto Transactions
Bitcoin Market Relieved
The South Korean government held an emergency meeting on Thursday to adopt some measures to regulate the cryptocurrency market. The measures were announced to the public on the same day.
The regulators said from the start that they aim to curb the overheated cryptocurrency market. However, their announcement did not have a large impact. According to the Herald Corporation’s the Investor:
The market appears to be relieved because a blanket ban suggested by the Ministry of Justice was not adopted.
Last week, news.Bitcoin.com reported on South Korea putting the Ministry of Justice in charge of a new task force aimed to spearhead regulations. The Ministry of Justice has been considering strict measures including a total ban on cryptocurrency trading, which was not adopted at the emergency meeting.
Meeting Notes Leaked
Approximately 2 hours and 40 minutes before the government’s final announcement, some meeting notes were leaked and posted online. “The online community posted photos of the conference materials at 11:55 am,” Joongang Daily reported. However, the leaked document is not the final version of the regulatory measures and some points on them were not adopted.
Nonetheless, referring to the leak, the prime minister was quoted, “It is very shocking and unacceptable to me.”
The regulators’ final announcement was made via the Office of the State Planning and Coordination Center. The Office held a meeting attended by the deputy ministers of each ministry at 10:00 am on Thursday Korea Time and sent an email out to the press at 2:37 pm.
During the actual announcement, the price of bitcoin trended downward only slightly before spiking up 7% from 18.158 million won to 19.345 million won at 5:20 pm Korea time.
Bithumb Responds to Ban on Foreigners and Minors
The final measures announced by the regulators include “banning foreigners and minors from opening a new account and those who already own cryptocurrencies are not allowed to make additional purchases,” the Investor described.
An official at Bithumb, the country’s largest bitcoin exchange, told the publication on Thursday:
The latest measures [on minors and foreigners] won’t have much impact on us as we are already very careful with minors and foreign investors. But they could hurt smaller and unorganized platforms which allow teenagers to trade virtual currencies.
Clampdown on Virtual Bank Accounts Could Force Some Exchanges Out of Business
The measures also include banning banks from engaging in cryptocurrency-related activities and clamping down on virtual bank accounts, which news.Bitcoin.com first reported on Wednesday.
“Cryptocurrency market watchers are crying foul about the government’s clampdown that called for banks to stop issuing virtual accounts for digital currency exchanges,” wrote the Investor. An official at a crypto exchange told the publication:
This is perplexing because the use of virtual accounts was a government initiative. We were close to signing a contract with two major banks for virtual account services but yesterday morning they told us they cannot go ahead with the deal. If all banks close their virtual accounts services for cryptocurrency platforms, then the platforms will go out of business due to a lack of alternatives.
The news outlet pointed out that there may be other ways to transfer money for trading in cryptocurrencies, but most transactions are done via virtual bank accounts. A Bithumb official announced:
We are reviewing alternative methods. Even if we cannot use virtual accounts, there are ways we can make sure that there are no obstacles for opening a new account or making transactions.
According to Hankyung, given that the announced measures were not as severe as previously indicated by the Ministry of Justice and the crypto markets continue to grow, “the government announced that it would prepare additional measures.”
What do you think of the regulators’ emergency measures? What do you think will happen to Korean bitcoin exchanges? Let us know in the comments section below.
Images courtesy of Shutterstock, Yonhap, and Bithumb.
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