The regulatory storm on cryptocurrencies has blown to South Korea
On September 17, news from the Korean financial community that as the Korean financial authorities strengthened supervision of cryptocurrency exchanges, it is expected that dozens of cryptocurrency exchanges will notify investors to suspend trading, and small exchanges will become a “severe disaster zone”. ".
The "Kimchi Coin", which young Koreans are keen to invest in, may be closed this time and suffer a loss of about 3 trillion won.
South Korea strengthens cryptocurrency regulation
It is reported that in order to continue operations, all South Korean cryptocurrency exchanges must register with the financial sector before September 24, provide an Internet security agency's compliance certificate, and cooperate with banks to ensure the real name of the account. Unregistered exchanges Services will be closed after September 24. Those exchanges that have registered but failed to establish a cooperative relationship with the bank will be banned from doing business in the Korean won.
The data shows that as of September 15, the Korean won is the sixth largest legal tender in the world for trading major cryptocurrencies.
The Korean Financial Services Commission stated that if the exchange determines that it will be closed, customers should be notified of the date and withdrawal procedures within a week before the closure, and it should be completed no later than September 17. Exchanges that fail to comply may be fined up to 50 million won or imprisoned for up to five years.
It is reported that due to the new regulations, nearly 40 cryptocurrency exchanges in South Korea will suspend all services, and 28 have security certificates but have not yet established cooperative relations with banks. Only four exchanges-Upbit, Bithumb, Coinone, and Korbit, have registered and established partnerships, so they will be settled.
At present, the number of small and medium-sized cryptocurrency exchanges in South Korea is still uncertain. However, according to Yonhap News Agency, market observers believe that they account for about 5% to 7% of South Korea’s total cryptocurrency transactions. Over the past few months, the South Korean government’s determination to expand supervision has hit the price of Kimchi Coins, and some small exchanges have voluntarily stopped the business.
"Kimchi Coin" is also a cryptocurrency developed and traded by Koreans. This currency is often smaller in value than Bitcoin, has worse liquidity, and is most affected. The Korean Fintech Blockchain Association estimated last week that the rectification may cause 3 trillion won in losses to investors holding kimchi coins.
Novice investors lose their money
According to a report by the South Korean government, as of the end of June this year, the total trading volume of the four major exchanges in South Korea was 401 trillion won. South Korean investors regard cryptocurrency as a lucrative asset during the COVID-19 pandemic, and investment trends are getting younger and younger. Some young people said that in the case of skyrocketing housing prices, their income should be allocated to more investment.
An office worker in his early 30s said that few people know exactly what cryptocurrency is, but investing in it is like a gamble.
Some people pointed out that Korean young people do have many reasons to invest in cryptocurrency, and they regard this as an open source in a social environment with high unemployment. According to Korean media, since 2015, the younger generation who "living less than their parents" have become extremely distrustful of the value of the existing currency.
Survey data in 2021 showed that among the 30 to 39-year-old working population in South Korea, about 49.8% said they invested in cryptocurrency. The 20-something group followed closely behind, accounting for about 37.1%.
In April of this year, YunHae-ri, a 26-year-old South Korean cryptocurrency investor with no financial management experience, bought a token called Metadium. Now he has lost money but has lost his money. "I have to admit that I did not look at the operator's financial statements. I made the investment mainly based on the popularity of the token and the recommendation of the media, relatives and friends.
The South Korean government has been following this trend closely. "People of all ages are investing in virtual currencies," said Doo-HyunYoon, a member of the Political Affairs Committee of the Korean National Assembly. "The government will be more cautious when formulating virtual asset policies and will pay special attention to young investors."
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