Yoo Byung-joon, business administration professor at Seoul National University, the most prestigious college in South Korea, has stated that the South Korean government introduced premature regulations for the bitcoin and cryptocurrency market.
As CCN reported in December, the South Korean government released various policies to strictly regulate the South Korean cryptocurrency market and protect investors within it. Initially, after the December 13 emergency meeting to discuss the state of the cryptocurrency market was held, the South Korean government introduced the following four regulations:
- Prevent unaccredited investors from dealing with losses through highly volatile cryptocurrencies.
- Prevent strictly regulated cryptocurrency exchanges from operating as speculative platforms for unaccredited investors.
- Request banks and exchanges to ensure underaged investors and foreigners cannot open trading accounts on cryptocurrency exchanges.
- Temporarily suspend institutional investors and retail investors from investing in cryptocurrencies.
By the end of December, the South Korean government released three more regulations and emphasized that it will impose practical regulations by closely monitoring the cryptocurrency market. The government noted that it does not intend to restrict the growth of the cryptocurrency market and the development of innovative blockchain-based technologies.
However, in regards to the South Korean government’s statement that it intends to close down exchanges that are not in compliance with local regulations, professor Yoo noted that the regulations introduced by the South Korean government are premature and too early for the market.
Yoo expressed his concerns over the strict regulations the South Korean government plans to implement, given that harsh regulations can restrict the exponential growth rate of the South Korean cryptocurrency market.
“I think the decision seems too quick. We don’t need to do that, but they worry about fraud or such. But there’s no guarantee that this shutdown will pass Congress, so we have time. Governments, you know, are risk-averse. But economically, I think it’s not a good decision. There’s no need to hurry,” said Yoo.
Currently, the South Korean government is intentionally imposing strict regulations for the cryptocurrency market because of the rapidly increasing number of speculators in the space. South Korea has become the largest cryptocurrency markets for several cryptocurrencies like Ripple and Bitcoin Cash. Ripple, in particular, has nearly 50 percent of its trades processed by South Korean cryptocurrency exchanges like Bithumb and Korbit.
But, Yoo explained that the government should avoid restricting the development of new technologies and development of the local market. Since any technology can be misused for criminal activities, Yoo emphasized that the government should not focus on that aspect of bitcoin and other cryptocurrencies.
“There’s a delicate balance involved. But a lot of governments are looking at this very carefully. Some are even considering putting their currencies on the blockchain system. The biggest challenge facing bitcoin now is the potential for misuse, but that’s true of any new technology.”