The South Korean government is planning to ban crytocurrency trading as its negative effects increase. Some experts point out such regulations will cause South Korea to fall behind in the blockchain technology development competition and Industry 4.0. The others say the utility of virtual currencies has been exaggerated.
Hongik University business professor Hong Ki-hoon said, “The trade of bitcoins should be regulated to protect investors as the controversy over institutionalization of bitcoins are utilized by bitcoin speculators,” explaining the belief that the cryptocurrency will be a core growth engine is exaggerated. He also stated, “It is due to the lack of regulations that the bitcoin looks convenient in settlements. Once it is accepted as a currency and enter every constitutional system, it will cause a lot of problems.” He added that Bitcoin is not suitable for large-scale trading due to its slow settlement and Bitcoin is problematic in terms of trading speed and trading volume, which is the weak point of the blockchain technology.
“The lack of trader protection is another problem of Bitcoin,” he went on to say, “Still, I’m opposed to a ban on trading itself for equity. With speculative trading also occurring in the gold market, stock market, grain market, and so on, a ban on Bitcoin trading is groundless and is against equity. What matters is the establishment of a mechanism for trader protection.” He added that the South Korean government’s ban on initial coin offering (ICO) in September this year was a reasonable preventive measure.
Meanwhile, Konkuk University financial information technology professor Oh Jung-keun criticized the government, saying it should accept virtual currencies in a hurry so that trading can be carried out in a reliable way at qualified exchanges as in the case of Japan.
“The ongoing skyrocketing prices are only transient,” he remarked, adding, “Although demands surged after Japan accepted a virtual currency as a trading currency in April this year, such skyrocketing prices are unlikely to occur next year and later.” He also mentioned that the government should change its ICO policy and South Korean startups will go abroad for ICO unless the government changes it.
According to him, virtual currencies are a tool that enables P2P trading in the financial sector. “Blockchain, which is capable of boosting the efficiency of trading by reducing costs and saving time, is completed only when it takes the form of a virtual currency.” he commented.
In the meantime, the government holds a meeting on December 15 to discuss virtual currency regulations.