What is going on in South Korea is unclear as mixed signals keep coming from the country with some suggesting the proposed ban is off the table while some suggest they are to go ahead.
“Opinions on cryptocurrency trading are sharply divided within the government,” Hong Nam-ki, minister of the office for government policy co-ordination, said according to reuters before adding he “vowed to make a decision on regulations during Thursday’s parliamentary session.”
Reuters further reports South Korea’s chief of the Financial Services Commission said: “(The government) is considering both shutting down all local virtual currency exchanges or just the ones who have been violating the law.”
The latter looks more likely. South Korea’s Joongang Daily reports Kim Sang-Joo, chairman of the Fair Trade Commission (FTC), said according to a rough translation:
“The virtual money exchanges are being investigated on whether they are reporting to telecom dealers under the E-Commerce Act of the FTC. We are investigating whether the Exchange is suspected of violating the terms of the contract, such as restricting the withdrawal of counterparties or imposing excessive immunity.”
While apparently Kim said outright banning exchanges is “impossible” and beyond their legal authority, he suggested legal enforcement could be used to in effect potentially achieve the same aim. He said according to a very rough translation:
“Whether a violation of the e-commerce law is likely to happen relatively quickly, the e-commerce law does not have the right to close the virtual exchange. But there are many illegal activities discovered during the investigation. I will notify the ministry and plan to take appropriate measures.”
The first sentence perhaps can be better paraphrased to state where there is a violation of the law exchanges can be closed relatively quickly, but in the absence of such violations there is no law to generally ban exchanges, thus they have no such authority.
However, he further says exchanges have engaged in “many illegal activities,” but he doesn’t mention which ones, nor is it clear whether any exchange has been cleared of any wrongdoings.
Currently, the FTC is investigating Bithumb, Korbit and 13 other exchanges based in South Korea, and in the process has apparently discovered violations, but the chairman seems to be in favor of regulations rather than outright banning. He says:
“Since virtual money investment is actually unstable enough to be called speculation, I think the ministry should go out and regulate.”
But there may be a power struggle underway as some officials are interested in encouraging innovation in the country.
For example, the Ministry of Science, Technology and Communication is interested in fostering core technologies of digital currencies.
Public opinion in South Korea is surprisingly somewhat divided with some polls suggesting 43% are in favor while 47% are against a ban. The latter, however, are more likely to have a strong view on the matter to the point where it may affect their voting decisions.
Some 200,000 South Koreans have signed a petition demanding any proposed ban does not go ahead with the popularity of their president slightly falling recently.
Unlike China, South Korea is a democracy. Their decision therefore may have consequences when it comes to election time. With the opposing party seemingly against.
Ha Tae-kyung, a legislator with the opposition Bareun Party, wrote on Facebook a strongly worded post against criminalizing digital currencies, stating it would fly in the face of the administration’s claims to support new technologies and would turn ordinary people into criminals.
Regulations, therefore, appear more likely, but due to language barriers there is a fog. Yet the outcome may be the first political test for this space, indicating just how much influence the blockchain constituency has in a democracy.