It is undeniable how cryptos changed the landscape in finance. However, not all countries can match the enthusiasm showed by South Korea’s crypto market. South Korea is one of those countries that have accepted cryptocurrencies openly. In fact, kimchi price has been coined to explain the higher buying price in the country. However, South Korea is serious about making the necessary regulatory changes in the crypto market. The government is now introducing new guidelines that will prevent local crypto exchanges from buying cryptos from foreign exchanges.
Kim Yong-beom who is the vice chairman of South Korea’s Financial Services Commission attended a Financial Stability Board meeting at Basel, Switzerland earlier this week. The FSB is an international body that is known for monitoring and providing recommendations to its members when it comes to the global financial system.
Kim mentioned to other regulators that “The so-called kimchi premium stood at 0.6 percent on June 19”. He also added that “On Jan 7, speculative rally in bitcoin in South Korea prompted investors to pay premiums of 46.7 percent compared with international prices”.
The new guidelines that will eventually stop kimchi price are going to be in full effect by July 10 for an entire year. FSC said that “it will step up monitoring of money transfers between local and foreign cryptocurrency exchanges”.
Aside from removing the kimchi price, the South Korea government also implemented a real-name system for cryptocurrency accounts. This new rule was in effect by the end of January this year. What this means is that it has effectively banned “the use of anonymous bank accounts in transactions to prevent virtual coins from being used for money laundering and other illegal activities”. In addition to this, it was also the effort of the government in order to curb speculative investment into virtual money.
Despite the fact that this move has decreased the number of banks that are converting virtual crypto accounts to real-name ones, this move has been considered effective. FSC mentioned that “The frenzied buying of bitcoin and other cryptocurrencies seen in January this year in South Korea has been fizzling since the government banned anonymous trading of cryptocurrencies”
Japan Is Also Implementing Stricter Regulations
Japan is also implementing rules that can change the crypto market. In fact, there are new guidelines that crypto exchange businesses need to meet before they can operate in the country. The goal is not only to protect investors but to also get rid of money laundering. In fact, Japan is also taking out digital currencies providing an extra layer of anonymity to its users such as Monero.
And also, Japan is dealing with concerns regarding hacking. Coincheck was one of the largest cryptocurrency exchanges that have been victimized by hackers. In South Korea, two exchanges in less than two weeks were hacked.
Will this move affect the price of Bitcoin and other digital currencies? Considering that South Korea is a large market for cryptocurrencies, could this lead to a shift in the price of Bitcoin? Currently, Bitcoin is closing towards losing 60% of its price for the year.