Will South Korea Close Cryptocurrency Exchanges?

Written by Thoinot Arbeau
Last updated May 18, 2024

Bitcoin continued its plunge on Thursday after South Korea announced the possibility of a complete closedown of some cryptocurrency transactions. They said that they would take such severe actions to put an end to the digital currency craze. Cryptocurrencies are becoming a more substantial part of the world economy by the moment, so why would South Korea close cryptocurrency exchanges?

When the prices of bitcoin and other virtual currencies skyrocketed earlier this year, South Korea was the place of origin of the phenomenon. The impact on the public was so strong that the prime minister expressed sincere concerns about the effect this trend could have on Korean youth.

Will South Korea Close Cryptocurrency Exchanges?

The fact to consider before answering the question is how big of an impact bitcoin had on the global economy. In short, the answer is - huge. South Korea is world's 4th most powerful country financially, so their economy is by now tightly related to digital currency. By now, digital exchanges are responsible for more than one-fifth of world trading. Therefore, there is little chance that South Korea will actually resort to such harsh actions.

Bitcoin Korea

However, the rumors related to the shutdown of cryptocurrency in South Korea gained too much momentum. Eventually, the government itself had to take action and issue a statement. Officials said that speculations regarding cryptocurrency in Korea attracted too much attention. Moreover, the government could not ignore the situation and leave the outcome to speculations. This statement came a bit longer than a week after one South Korean exchange filed for bankruptcy.

Korean Policy Makers Grow Worried

Korean officials are becoming more and more concerned with the direction in which the country is going. They believe that the mania is going too far and that that could cause the country to become a prey for traders of bitcoin everywhere in the world. The fact that the government is taking the situation seriously is supported by the fact that a task force was formed to deal with the situation accordingly.

Another aspect of the problem might be the possible abuses where bitcoin is involved. As we have written before, cryptojacking is taking momentum, as more and more internet users globally are becoming victims. Governments, as much as internet users, should take steps accordingly to protect themselves and put a stop to the trend.

South Korea close cryptocurrency exchanges plunge

Singapore Issues a Warning As Well

The financial authorities in Singapore issued a warning last week, prompting their citizens to be more careful. They added that people who trade in bitcoin could possibly lose all their money. By doing this, they have gotten on the same train with many others who warned about the mania surrounding bitcoin and the possible adverse outcome.

Stephen Innes, head of trading at Oanda for Asia said that officials are becoming worried that the problem surrounding bitcoin is predominantly of a retail nature. He also added that regulators around the world as well as in Asia might start to deal with this fact. His reasoning is that they have not yet faced the reality of what the ultimate consequence of a complete plunge of cryptocurrency could be for the world economy.

What Actions Might South Korea Really Take

South Korea will most likely demand real-name cryptocurrency exchanges, which would be a big difference from the situation now. Moreover, they will issue a stop on the digital accounts that banks offer to crypto-exchanges, according to the government's office for policy coordination. Then, should we worry and will South Korea close cryptocurrency exchanges? Ultimately, the policymakers will decide on the actions to take. These include the complete ban on crypto-transactions, as the Ministry of Justice has already suggested.

Final Thoughts

Will South Korea close crypto-currency exchanges? How likely do you think such a harsh move is? And what do you think the effect on cryptocurrencies would be world-wide?

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