South Korea is the beating heart of Cryptocurrency as it is where most of the crypto transactions originate from. This technology obsessed country has embraced it the most and it is one of the main reasons why we have seen a boom in the market. It is the country that has the most citizens that have a Bitcoin Wallet and it is in so much demand that the exchanges can charge more than the rest of the world. What happens in this area of the world greatly affects the price of BTC and other ALTCoins. It is why over the last few weeks the prices of cryptos have fallen as the country`s FSC implements new rules.
The new rules introduced by the Financial Service Commission in South Korea aims to tackle illegal activities along with tax evasion and money laundering. It plans to make anonymity illegal which will be hard to do due to the technology advances. These rules have curbed speculation in the sector for now but once investors know the new laws along with the impact, they are sitting on the sides to see how things develop first.
One of the main concerns with cryptocurrencies trades is that it is used to launder vast amounts of money around the world. The new laws will mean that all trades that are carried out on cryptocurrency exchanges can only be processed to account with real names along with a linked bank account.
A high percentage of the cryptocurrency trades are coming from China and the new laws will make this harder. Foreigners are not able to open an account which will slow down the Chinese trading.
New guidelines have been put in place for financial institutions which will need to verify extra information when linking to cryptocurrency exchanges. Identity checks are at the heart of this new change aim at stopping illegal activity. If banks suspect that something illegal is taking place they are required to submit a report. This will mean that if an account holder is withdrawing greater than $10,000 each day, it will be red flagged for investigation.
These new rules have spooked the market and the price will continue to go down until everyone knows the exact rules that they have to play by. Bitcoin and cryptocurrencies are prone to big price swings and need to be judged over a minimum 12 month period. It may be down from its highs at the end 2017 but at the end of 2018, I fully expect it to be well above its previous record. The changes are having a big impact over the short-term but they will further improve the sector and will help drive the price up once everything has been agreed on.
Due to the vast scale of the cryptocurrency in South Korea, it will not be the last time that the authorities crack down on the market. They have already banned ICOs and they have started cooperating with China following their policies. The problem with making things illegal is that creates a huge black market which would need vast amounts of resources and time to carry out. The best way is to let the market decide, which is something that Governments have stopped doing. They have created a vast bond, derivatives and hyperinflation world that is about to explode. Cryptocurrency is not the enemy, it is the solution.