South Korea makes massive U-turn on cryptocurrency

Government regulators in South Korea have made a surprising U-turn on crypto, by encouraging banks to work with cryptocurrency exchanges.

The South Korean cryptocurrency industry can expect a better deal moving forward as the market regulator changes tack.

This new positive outlook is a stark turnaround to the tough stance on the virtual coin trade expressed in recent months.

New policies now promise instead to help promote blockchain technology.

South Korea has become a hub for trading cryptocurrencies, and the regulator said in a statement on Tuesday that the industry should normalize the virtual coin business in a self-regulatory environment.

Choe Heung-sik, chief of South Korea’s Finance Supervisory Service (FSS), said in a statement to the press:

“The whole world is now framing the outline (for cryptocurrency) and therefore (the government) should rather work more on normalization than increasing regulation.”

These latest comments suggest that officials are now looking to adopt a lighter regulatory touch.

It’s a significant change in position from the justice minister’s warning in January.

Previously, Park Sang-ki said his ministry was preparing legislation that would permanently ban any cryptocurrency trading through South Korean exchanges.

News that the government was considering shutting down local cryptocurrency exchanges threw the crypto market into turmoil.

FSS has been leading a task force set up to handle the government’s regulation of crypto trading.

A positive step for the industry

Cryptocurrency investors see Choe’s comments as a positive move for the industry’s plans for self-regulation.

Kim Haw-joon of the Korea Blockchain Association believes the government wants to cooperate with the crypto industry, saying:

“Though the government and the industry have not yet reached a full agreement, the fact that the regulator himself made clear the government’s stance on co-operation is a positive sign for the markets.”

In January this year, South Korea banned the use of anonymous bank accounts for cryptocurrency trading.

The new measure was designed to stop cryptocurrencies being used for money laundering and other criminal activity.

Shinhan Bank, Industrial Bank of Korea, NH Bank now all offer cryptocurrency accounts to five local digital coin exchanges

Although they haven’t yet started handling transactions, Kookmin Bank and KEB Hana Bank may also put a similar system in place, according to Choe.

“I hope they (the banks) no longer fear authorities once they have the right system,” Choe added.

Market recovers as regulation fears subside

The world’s largest cryptocurrency, Bitcoin, has shown definite signs of recovery this week.

On Tuesday it reached a high of almost $12,000, according to Coinmarketcap.

BTC was up almost 100% from its recent low after falling to just over $6000 in early February.

Samsung has also recently announced it would be joining the cryptocurrency revolution.

The South Korean electronics giant has already started production of crypto mining technologies, local media reported in January.