The crypto market in order to be legitimized needs a number of regulatory changes. And so far, this is unfolding in different parts of the world. Unfortunately, different countries have a different opinion regarding the industry. And since it’s still somewhat new, the crypto market is subjected to different approaches. In fact, some countries are even correcting previous steps.
South Korea, for instance, banned ICOs in 2017. By May 2018, there were already plans to reverse this decision. In addition to this, South Korea planned to further loosen its crypto regulations and meet with the G20 directive on a unified regulatory approach on cryptocurrencies.
Today, the government of South Korea is looking to finalize the first-ever crypto and blockchain legislation. What it will do is to recognize the crypto and blockchain sector as legitimate industries. What South Korea is planning to have more comprehensive regulatory frameworks that can offer better protection to its investors. And also, this would make it easier for cryptocurrencies to be adopted and embraced even by the government.
Hacks in June
This can be considered a good move. Last month, there were two hacking incidents on South Korean crypto exchanges, Bithumb and Coinrail, that made created panic within the market which initiated a drop in Bitcoin’s value. This event prompted the government to acknowledge the need for strict regulations within the market.
Before, cryptocurrency exchanges only need to have a communication vendor license that costs around $40. It also has no requirements whatsoever. However, by the time the new regulation is passed, cryptocurrency exchanges will then be considered as regulated financial institutions. This means that there will be strict security measures including internal management system, Know Your Customer, Anti Money Laundering, and even transaction monitoring requirements.
According to KFIU spokesperson, “Under current regulations, there are clear limitations in preventing money laundering on crypto exchanges because the only way authorities can spot suspicious transactions is through banks. If the bill of lawmaker Jae Yoon-kyung from the Democratic Party of Korea passes, local authorities will be able to impose identical regulations on crypto exchanges that are implemented on commercial banks”.
What exactly does it mean for the next few months in case this bill turns into a law? One, investors can expect more capital flow into the local cryptocurrency market. South Korea is already known for its huge crypto market. In fact, cryptocurrencies are popular that there is what is termed as “Kimchi Premium”.
And for this reason, this can also play a pivotal role in affecting the price of cryptocurrencies. And with positive crypto regulatory changes happening in different parts of the world as well, it is not far from happening that we are going to see another bull-run. The US SEC may have rejected the Bitcoin ETF application of the Winklevoss Twins. However, it is true that there are other Bitcoin and Crypto-related ETF applications.
There is a chance that there will be a Bitcoin-ETF soon. Though the US SEC has its own reservations concerning market manipulation, the good news is that they are open to changes.