Industry Reports

South Korean Finance Watchdog Drops Bid to Regulate Bitcoins

South Korean finance watchdog officially announced that the country abandons plans to regulate bitcoin exchanges. The officials did not completely scratch off this opportunity from their to-do lists but they are to wait for the cryptocurrency to be legally recognized. Paradoxically, the announcement came shortly after the South Korean Financial Supervisory Service (FSS) explained that they are to clear the legal hurdles and take steps towards regulating bitcoins. The country’s sudden decision raised traders’ eyebrows.

In an interview this Tuesday, Choe Heung-sik, chief of the FSS said that the financial watchdog is to recognize cryptocurrencies as an official payment method after the technologies receive legal recognition. The recently-appointed chief of the FSS argued that bitcoin is a bubble, which is going to burst in the near future. Mr. Choe Heung-sik made it clear that bitcoin supervision will be possible only after the cryptocurrency receives legal recognition. Mr. Heung-sik took the opportunity to explain that bitcoin relies mainly on speculations and that is the reason why FSS cannot consider it as a financial product or service. Hence, to supervise digital assets is not in FSS’ bag at this moment.

South Korea’s stance on the matter has changed a number of times so far. At first, the country’s officials remained neutral regarding the cryptocurrencies. Afterwards, the country decided to join Japan and regulate the use of bitcoin as a financial tool. At present, it seems that the country’s officials run to the other extreme, completely refusing the use of bitcoins.

According to industry experts, FSS’ decision is provoked by the Bithumb’s server crash, which happened on 12th November. Bithumb is among of the largest bitcoin exchanges in the world and its server failure deprived many traders to benefit from the recent bitcoin price hike. As a result, bitcoin traders lost billions. This unleashed a wave of massive discontent, which ended in nearly 3,000 people filing a legal challenge against Bithumb. South Korean exchange Bithumb apologized for the technical problem and promised to compensate people for their losses. However, the scandal led to a hail of concerns regarding the use of unregulated cryptocurrencies.

Reasons for Bitcoin Price Hike

The great interest in bitcoin rocketed its price on multiple occasions. The most popular digital currency set a new record only a few weeks ago. The red-hot cryptocurrency soared above $6, 000 to hit a new record. Industry insiders shared their stance on the matter, explaining that the perspective for bitcoin to gain Asian exposure was among the main reasons for the drastic surge in price. Even bitcoin price plummeted after South Korea announced its decision to fold up plans to regulate the cryptocurrency, bitcoin is still trading more than well.

The price determination of a product is extremely sensitive to interest rate changes. Cryptocurrencies make no exception to the rule. Bitcoin has been embraced by many cash-intensive sectors so far. The use of the digital payment within the online gambling industry has already changed the face of the industry and the innovative technology readies to step across the line and enter land-based casinos.