South Korea has taken a lead by initiating a meeting with counterparties from China and Japan to focus discussion around the regulation of cryptocurrencies. South Korea then called a FSB conference with 23 countries regarding the control of crypto trading and a collaborative approach cryptocurrency and its threats.
Differing Perspectives on Bitcoin
China originally had an impressive 95% share of the global trading volume of bitcoin. The country has imposed several bans targeting crypto: in 2013 China started by banning crypto-currencies from all banks and financial institutions, followed by a more recent ban on ICOs in September 2017 and a ban on crypto trading on local exchanges.
Japan however, was one of the first nations to embrace Bitcoin in a big way, seeing it as an opportunity and declaring it a ‘legal method of payment’ in April 2017, implementing the Payment Services Act and Virtual Currency Act. Japan is now considered the heart of Bitcoin with 54% of the global trading and over 5,000 stores accepting the currency as payment.
South Korea’s Point of View
South Korea’s meeting with Japan and China demonstrates the seriousness of Bitcoin's impact. By gathering information from all perspectives and the regulations that each country have used, the countries can strategize ideas for a regulative approach that would fit for multiple situations.
The South Korean prime minister believes cryptocurrency to be pure speculation and refers to it as a “pathological phenomenon”. Korea banned ICO’s shortly after China and now there’s interest in banning anonymous bitcoin trading as of January 20th.
Investigations into 6 major South Korean banks including; NH BAK, Industrial Bank of Korea, Shinhan Bank, Kookmin Bank, Woori Bank, and the Korea Development Bank have prompted concerns that their ties to the bitcoin exchange ecosystem could be non-compliant with the new anti-money laundering regulations.
Regulating Bitcoin Together
South Korea wants to take a collaborative approach to curbing the trading of cryptocurrencies, as the government calls for a meeting of the Financial Stability Board. The FSB contains the financial regulators and central bankers representing 23 countries and 12 organizations.
It was discussed that the FSB should identify the potential risks of cryptocurrencies, in regards to the global financial stability. South Korea ended the discussion by announcing the importance of supporting the countermeasures of virtual currencies by sharing information, contents and the effects of the regulations within each country.
This is the first time cryptocurrency has been brought up as a global issue which is threatening the world’s financial stability. With the discussion emphasizing the issues of money laundering, cyber security and cyber crime, including illegal acts being carried out with cross-border cyber transactions. The Financial Stability Board has created an international debate around cryptocurrency. All this begs the question has South Korea initiated the beginning of the end for cryptocurrency? Or just the beginning of the legitimization of the platforms?