In South Korea, one in three citizens either own or are paid cryptocurrency. One-tenth of its population trades in digital assets, and has a youth unemployment rate of over 10%. It is a competitive job market in the East-Asian nation, where high expenditures implement hierarchical social structures, and financial stability may seem like a pipe dream.
On matters of technology and innovation, South Korea is incredibly progressive. There has been much discussion in cryptocurrency since it became common knowledge in the country.
Its open views towards technological progress may mean that the country will decide to regulate blockchain-based tokens – rather than imposing restrictions. However, gambling is considered illegal under South Korea’s law, and while many projects lean too much on the speculative side of things, some firms will likely face increased scrutiny.
On the surface, South Korea has one of the strongest economies in the world – the fourth largest in Asia and the 10th largest globally – with an extraordinary human development index and only moderate levels of income inequality. However, beneath the surface, a financial revolution is slowly brewing, and blockchain is at its heart.
The South Korean stock market is dominated by four family-owned conglomerates or “chabols”, many of which are corrupt and politically influential. Recently, reported versions on top Korean cryptocurrency exchanges surpassed the country’s stock market, which could be a sign that people are clarifying their intentions.
As a country, South Korea is a major contributor to cryptocurrency editions worldwide. Digital wealth is part of the culture there, enabling many young citizens to obtain it despite Korea’s rising unemployment rate. After long adopting the concept of micropayment through its passion for video games, South Korea was already ready for digital assets before the existence of cryptocurrency.
The country also has the world’s fastest Internet speeds, and its citizens are familiar with mobile payment systems due to the country’s strong telecommunications industry. In 2019, the government introduced its own cryptocurrency through S-Coin, a government initiative.
However, the government later passed legislation to ban blockchain investment in March 2020, and South Korea’s citizens, especially its youth, were not happy. Mark Lee, founder of South Korea’s blockchain marketing agency Eightfive, told Cointegraph, “South Korea is quite conservative when it comes to speculative products. High youth unemployment numbers are often seen as one of the reasons many youth are drawn to bitcoin and other cryptocurrencies. “
According to reports from local news outlets, South Korean youth are leaving their jobs to explore day-trading cryptocurrency. Most Korean citizens see digital wealth as a means of wealth creation that is much faster than their earlier employment. This has come to a point where some companies have started threatening to block crypto exchanges on their networks, preventing their employees from checking price fluctuations during the day.
“Different areas have different concerns,” said Ben Castlein, head of research and strategy at South Korea’s cryptocurrency exchange AAX. Relations with North Korea. Therefore, we can expect the rules to continue in South Korea. “
In March, to ensure compliance with anti-money laundering regulations, South Korea’s top financial regulator, the Financial Services Commission, or FSC ordered that cryptocurrency exchanges be licensed to operate “virtual asset service providers” or VASPs is required.
He also reported that he had until September to comply, but during the National Assembly’s policy committee meeting on April 22, FSC Chairman Yun Sung-soo said that the FSC had not yet received any VASP application. Sung-soo also said that if the current trend continues, more than 200 exchanges will be closed by the end of the year.
Last month, the South Korean exchange debit announced that operations would have to be halted due to difficulties in finding a banking partner amid new rules, but big players are facing similar challenges. Earlier this year, OKX shut down its Korean platform, citing issues with new anti-money laundering rules, as well as Binance Korea – eight months after its launch – in December, shutting down services.
The “big four” exchanges in the country – Bithumb, Coinone, Upbit and Corbit – registered about 2.5 million new users in Q1 of 2021 alone, 64% of them between the ages of 20 and 30. In fact, traders in their 30 million produced more than $ 398 million in trading volume during the quarter, spent on every other demographic.
“Surprisingly, bitcoin is not as popular as expected in Korea,” said Min Kim, the founder of the South Korean venture blockchain solutions icon. “For example, BTC is ranked # 10 in trading volume on Upbit, Korea’s largest exchange,” he said, adding “Koreans are investing heavily in altcoins today because they see crypto as a lottery ticket.” . ”
The nation’s youth are heavily dependent on these exchanges, and closing them will pose a serious setback not only to South Korea’s young investors, but to the global cryptocurrency market. There are also internal social class conflicts in the country, making cryptos incredibly attractive to the younger generation.
“South Korea is quite conservative when it comes to speculative products. High youth unemployment numbers are often seen as one of the reasons many young people are drawn to bitcoin and other cryptocurrencies, “Lee said,” Political uncertainty is also a concern, and because bitcoin from any state Not connected, it is attracting man. “
The FSC President recently ordered all FSC officials to report their cryptocurrency holdings by May 7, although the penalties for violating these measures are also not harsh.
According to reports, only four large cryptocurrency exchanges are likely to sign up and obtain a VASP license by the deadline. While this will not completely kill cryptocurrency trading in South Korea, it may lead to consolidation of crypto-related resources within the country. Caselin added:
“In South Korea, perhaps more than anywhere else, there is a very real concern over capital flows, especially in relation to North Korea.”
According to Kijun Seo, CEO of decentralized video game development studio Planetarium, “The government is still trying to figure out how to monitor investment and speculative activities this year with new tax and registration laws.”
In February, the country’s Ministry of Finance fast-tracked a $ 202 tax over cryptocurrency profits by introducing $ 202, which is now expected to be passed into law by January 2022.
Sung-soo also recently came under fire for his negative remarks about cryptocurrency, with more than 300,000 angry citizens asking him to sign a petition for his resignation. Conflict between the people and the government is unlikely to solve any problem, but without sound regulation, it makes no sense for any government to open its arms to cryptocurrencies.
Regulators have real concerns about its pseudonym, but how positive the country is about blockchain, ensuring a healthy cryptocurrency market in South Korea is not just a national problem – it is a global one.
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