There is a positive note among participants in the cryptocurrency market in South Korea as new rules to monitor the market gets implemented from Tuesday. This despite the investors and traders in cryptocurrencies being spooked when the South Korean government announced plans for regulation of speculation in the market of virtual currency earlier this month.
While there was confirmation available about the implementation of the new measures outlined by South Korea’s Financial Services Commission, the body refrained from making any predictions on the likely impact of the new regulations for the market.
The regulator would only allow trading in cryptocurrencies from bank accounts with a real name from Jan. 30, according to a document published on Jan. 23 by the regulator.the document said that the new rules would enable banks to enforce and comply with KYC AML (know your customer, anti-money laundering) requirements.
The measures outlined were intended to “reduce room for cryptocurrency transactions to be exploited for illegal activities, such as crimes, money laundering and tax evasion,” the FSC added in the document.
There was relative sanguinity in the market about the impact post implementation of the new regulations.
Operations had “gone smoothly” on Tuesday, said a representative of South Korean cryptocurrency exchange Bithumb. On Tuesday, the exchange started the real-name cryptocurrency identification service. “Nothing has changed in terms of coin transaction,” the representative added.
In the long-term, there would be positive impacts of the measures taken by the Souoth Korean regulator, said participants in the cryptocurrency market.
“I think it’s the start of a crackdown on anonymity and the illegal use cases that some cryptocurrencies might have,” Julian Hosp, co-founder and president of cryptocurrency start-up TenX, told the media.
“If, afterwards, investors and companies have more legal security working in the ecosystem, it’s going to have some short-term downsides, but long term, it’s going to have a really, really big boost,” Hosp explained.
Earlier this month, investors and markets were spooked following mixed and conflicting messages from various South Korean ministries about the implementation of the news rules.
“Protocols to protect investors have been what the cryptocurrency markets have been missing and it’s what the legislation in South Korea seeks to implement,” said John Sarson, managing partner at Blockchain Momentum. Sarson’s firm invests in companies related to cryptocurrencies and blockchain.
“It’s a good thing anytime an investment exchange knows their client and makes sure that their clients are doing things that are above board legally,” he said, adding that those rules allowed for greater scale and legitimacy.
according to CryptoCompare, trading in bitcoin with the use of the Korean won was about 4 percent on Tuesday. Compared to that figure, about 30 per cent of all bitcoin trading is done in dollars and about 40 per cent in Japanese yen.
But according to Hosp, there can still be larger impact of the new regulations in South Korea in the market despite the low proportional use of the won in bitcoin trading.
“The space is highly emotional and things are taken from a small thing and extrapolated into something really large. So even if Korea is quite small on a rational scale, it still could have a big impact,” Hosp said, stressing that he thought the developments would ultimately be positive.
(Adapted from CNBC.com)