Virtual currency boom hits S. Korea
The crypto currency market is abuzz with news that the Chicago Board Options Exchange will become the first traditional exchange to open trading for Bitcoin futures this Sunday.
Bitcoin has taken off here in South Korea, too, and local regulators are taking notice.
Won Jung-hwan reports.
South Korea is one of the world's largest bitcoin markets, with about 1-million people trading the digital currency.
According to the New York Times on Sunday, although the population of Korea is only one sixth of the United States, Korean Won based accounts for some virtual currencies, such as Ripple and Bitcoin Cash, account for more trading than U.S. dollar based accounts.
It was on South Korean exchanges that the price of Bitcoin first hit 10-thousand U.S. dollars last Monday, hours before traders in the United States reached the same level.
The growth of the Korean cryptocurrency market is even more remarkable as just a year ago such markets barely existed in Korea.
But as the popularity of bitcoin has grown rapidly in Korea, so have the risks. Prime Minister, Lee Nak-yeon, expressed concern last week, saying that the rising Bitcoin use could lead to serious social problems if left unaddressed.
Currently such exchanges in Korea are largely unregulated as virtual currencies are not recognized as financial products under the current law.
"In the case of New York, virtual currency exchanges are regulated in the form of a registration and license system. But in Korea, anyone who has an online shopping mall license can freely open a virtual exchange office. So in a sense, there are no such regulations."
South Korean regulators have announced a ban on so-called initial coin offerings, in which entrepreneurs sell custom virtual currencies.
But the country needs further measures, such as those in place in Japan, to protect buyers and prevent virtual currencies from being used as a tool for money laundering.
"Japan has now changed to a registration system, meaning official approval from the government is needed to open a virtual currency exchange office"
Virtual currency trading in Korea doesn't have the same regulatory infrastructure as the United States and Japan.
But the Korean government has planned new regulations involving bank account registration for virtual currency traders. These regulations come into effect at the start of June next year.