South Korea Maintains Positive Outlook for Cryptocurrencies; Widens Probe to Prevent Fraudulent Activities
The cryptocurrency market is known for its dynamic price volatilities, with mainstream media outlets having a field day when bitcoin decides to jump by several thousand dollars. However, the price is not the only wavering change in the crypto-market, with regulatory bodies scrutinizing the industry not seeming to halt for taking a breather as well.
After South Korea’s announcement in March 2018 about its intentions to probe the thriving cryptocurrency-exchange business, the country is now urging global prosecutors to join them in strengthening the investigation, alongside introducing global policies.
As reported in The Korea Times on May 14, 2018, the country’s central financial authority, the Financial Services Commision (FSC), wishes to “coordinate” policies about crypto-assets with global regulatory bodies.
Speaking on the topic is Chairman of FSC, Kim Yong-beom:
“Following a request by the Financial Supervisory Service (FSS) and the prosecution to address growing anti-money laundering compliance concerns and possible abuse of cryptocurrencies in money laundering and fraud, the FSC is looking into exchanges’ corporate accounts opened in local banks.”
According to Yong-beom, the move places Bithumb at the center of an “extended investigation,” declining to reveal the reason. The South Korean based crypto-exchange ranks sixth in the world regarding total trading volume, as per data on Coinmarketcap.
Cryptocurrency Trading Market to be Largely Unaffected by Extended Probe
The exchange probe places no real threat to the cryptocurrency sector, a sentiment confirmed by Yoon Suk-huen, the governor of South Korea’s Financial Supervisory Service (FSS).
Suk-heun states that regulations governing blockchain projects and cryptocurrency trading shall be eased, as cryptocurrencies exhibit “some positive aspects.”
For the uninitiated – while the FSC regulates and controls financial policies, it is the FSS which supervises and examines financial institutions. Thus, the two bodies aim to join forces to eradicate any fraud or money laundering committed by crypto-businesses, not eradicate the crypto-market itself.
Furthermore, the FSS official appraises the collaboration, as it ensures that a common conclusion is reached by the two bodies, who usually have a different understanding and scope of financial subjects. However, Suk-huen maintains that both authorities share a similar conclusion of the cryptocurrency market.
Adding to these thoughts is Kim Yong-beom, Vice Chairman of the FSC, who believes that the steady development of blockchain will change traditional banking and financial industries concerning accessibility and efficiency and that the commision is evaluating cryptocurrencies as being a legitimate payment tool.
“Regarding the unique nature of cryptocurrencies, each country has its own assessment. That means an international discussion and cooperation among regulators to come up with policies on crypto-assets is necessary. Because this technology has the potential to shake up today’s regulations on securities, regulators have to respond to such a looming challenge.”
Markets React to Upbit Rumors
On May 11, 2018, after media outlets reported an investigation into South Korea’s top cryptocurrency exchange Upbit, a wave of panic selling endured after several sensationalist rumors on the subject. According to a Business Korea report, a total of $11 billion worth of bitcoin left the market, in addition to various other cryptocurrencies.
Upbit earlier faced allegations of faked balance sheets and deceiving investors, and local police raided the exchange’s office, confirming several fallacies in the servers of Upbit’s systems.
In the wake of such reports, it is imperative that authorities act to protect investor profits and create governing policies. However, the positive sentiment around the benefits of digital currencies confirms that although regulation is inevitable, the market is here to stay.