One of the reasons cryptocurrency prices took a nosedive recently was because of the remarks made by South Korean officials, which were taken to mean that a ban on cryptocurrency trading was imminent, resulting in traders becoming spooked and leading to massive selloffs. Now, regulators have clarified their position and, at least for now, cryptocurrencies were safe.
In comments made on Valentine’s Day, government officials said that what they want to do was curtail illegal acts or “uncertainties” in cryptocurrency markets. Hong Nam-ki, minister of the office for government policy coordination, said the government was moving towards legislation that would promote blockchain technology while working toward preventing it from being used for malicious activity such as fraud or money laundering. The clarification came as 280,000 signatures were gathered on a petition last month against the potential ban and drastic regulations. In accordance with state law, the government has to respond to petitions that receive more than 200,000 in 30 days.
In mid-January, Justice Minister Park Sang-ki publicly announced that the government could be contemplating a complete ban on cryptocurrency exchanges and trading. His comments were subsequently refuted by the finance minister on January 31, who simply stated that there was no intention to ban or suppress cryptocurrency. The diverse views at high levels of the government indicated that there was still no clear course of action ready to be instituted in the country.
In a move that might appeal to the general public, South Korean officials announced that they were reviewing the possibility of introducing an approval system for exchanges, similar to that of New York’s BitLicense, which has been controlling cryptocurrency interactions of residents or businesses in the state. The New York State Department of Financial Services implemented BitLicense in August of 2015. Although the office has received numerous applications, only four licenses have been granted. Circle was issued the first in 2016, followed by Ripple in 2016, Coinbase in 2017, and more recently, Bitflyer.
Aside from New York, Japan also has a licensing structure in place. It launched the system last year, and it has been high successful. To date, the country has approved a total of 15 exchanges since being implemented in September, with multiple others being denied for not meeting the proper criteria. Licensing systems are probably the most secure route to ensure a healthy, stable future for the cryptocurrency industry.