China’s blanket ban on cryptocurrencies in 2017 took the world by surprise, as the Chinese are usually at the forefront of adoption for newer technologies. However, the move did little to dissuade citizens from investing in the volatile digital asset class, as they resorted to using VPN or a slew of other methods to circumvent the ban.
Korea Fears Chinese Dominance
Now, Chinese venture capital firms and investment houses are making swift moves in the sector as well – without having to rely on VPN to make their investments.
According to a report in Business Korea, the Korean cryptocurrency market is experiencing a surge in Chinese capital into the country, sparking fears that Chinese players could soon dominate the market. Additionally, the launch of new exchanges is doing little to curb the excitement and only adds to the investor’s long-term expectation for the volatile asset class.
Industry observers cite the example of Zeniex, an exchange launched on February 12, 2018, which boasts a joint-partnership between Korean and Chinese partners. The firm has been funded by Chinese investors, such as internet security giant Qihoo 360 and local cryptocurrency media site Bishijie.
Similarly, popular exchange Gate.io ranked 19 in the world in terms of market capitalization, launched in Korea in May 2018, and Chinese investors control its parent organization.
While synonymous with South Korea, OKEx and Huobi are in reality Chinese businesses. Hong Kong-based OKEx entered the Korean market in partnership with NHN Entertainment in April 2018, and Singapore’s Huobi signed a contract with Korean digital entertainment firm Danal in March 2018. The exchanges are majorly funded by Chinese investors and are ranked second and third in the world respectively, as per data collated by CoinMarketCap.
Low Barriers to Entry
In contrast to Japanese and American laws, Korea does not have regulatory restrictions in place to control the opening, or entrance, of a foreign cryptocurrency business in the country. Thus, the low barrier to entry for Chinese companies and the benefit of proximity makes the island country an ideal location for eager investors.
Chinese players govern Seoul’s cryptocurrencies craze
With Chinese parent companies already running the show in Korea’s cryptocurrency market, industry experts are quick to point out the fallacy: a lack of regulatory action on Korea’s behalf will inevitably lead to a “Chinese capital’s invasion of the Korean market.” Experts are calling for swift regulatory restrictions as the country is also considering lifting its ICO ban. Requesting anonymity, an official concluded: “Chinese virtual currency exchanges are not yet competitive, but they are key players in the global market.”