SEOUL (Reuters) – With a tech-savvy population quick to adopt the latest gadgets and a young generation facing dim prospects in the conventional workplace, South Korea has been a fertile ground for virtual currencies.
But the countrys swift embrace of bitcoin and other cryptocurrencies has been met with an equally swift backlash by regulators, who have gone so far as to propose outright bans on trading.
With markets around the world watching, South Korea has become a fault line between a generation that sees cryptocurrencies as a way to a better life, and government officials who have likened the market to gambling and warned that it encourages illicit behavior.
On Thursday the justice minister, Park Sang-ki, sent global bitcoin prices temporarily plummeting and virtual coin markets into turmoil when he said regulators were preparing legislation to halt cryptocurrency trading.
As of Friday, a petition on the website of the presidential Blue House had drawn more than 120,000 signatures opposing the move. Heavy internet traffic briefly crashed the site.
The online uprising against the governments plans puts President Moon Jae-in a tough spot, and his office was quick to say a ban is just one proposal under consideration.
The latest idea to ban it all seems to have come out of a fear that when the bubble bursts and things go wrong, it will be all on the government, said Yun Chang-hyun, an economics professor at University of Seoul.
With the youth unemployment rate three times the national average and a growing income gap between rich and poor, many young Koreans worry about their economic prospects.
Tax it as much as you want but dont shut it down. My life depends on it, one petitioner wrote on the Blue House website.
Lee Min-kyung, a 25-year old student in a Seoul-based graduate school said she earned about 18 million won (16,973.93), double her initial investment in bitcoin. She said the government is showing haphazard responses simply because officials have no idea.
They say the purpose of the regulation is to curb speculative moves, but it makes me just think the government simply doesnt understand what the market is, Lee said.
More than 30 percent of 941 office workers surveyed in December by Saramin, a South Korea-based job portal, said they traded cryptocurrencies. The respondents had an average of 5.7 million won ($5,357.14) invested in virtual currencies, and a majority of them said they began trading because they saw it as the fastest way to earn money.
That trend has earned critics on the street as well as in government offices.
Koh Young-sam, a 56-year old mechanic in Seoul, warned that the craze would collapse.
Young people shouldnt be lured into this kind of scam. There is always something fishy about things that grow this fast, Koh said.
South Korea is not alone in struggling to figure out how to tax and regulate online currencies, many of which are designed to provide anonymity for transactions.
In September last year, China cracked down on cryptocurrency trading, citing what officials saw as broader risks to the countrys economy.
As South Korea accounts for about 15 percent of global bitcoin trading, according to the website Coinhills.com, how regulators approach the issue will likely have international effects.
The local price of bitcoin in South Korea bounced back on Friday to 19.3 million won ($17,481.20) from as low as 17.5 million won ($16,445.82) according to Bithumb, the nations second-largest cryptocurrency exchange. On the Luxembourg-based Bitstamp, bitcoin stood at $13,709 after touching $12,800 the prior day.
Park Chong-hoon, an economist at Standard Chartered Bank in Seoul, said, South Koreans find it hard to deal with the jealousy from watching their neighbours getting rich fast.
It is a sentiment echoed by many. Scepticism of get-rich-quick schemes among South Korean officials has colored past forays by international finance into the country.
In the mid-2000s the U.S. private equity fund Lone Star faced raids of its offices and a years-long legal battle with the South Korean government after the foreign fund made millions of dollars buying and selling a controlling stake in a major South Korean bank.
That controversy, which raised concerns over South Korean money flowing to foreign entities, is probably among several factors making South Korea officials wary of managing the new breed of markets originated abroad, analysts said.
In a practical sense, the South Korean government needs to factor in some political aspects if a growing number of people lose huge sums of money on bitcoin because of the governments failed attempts to rein in the frenzy, people will blame the government, Lee Dong-gwi, a psychology professor at Yonsei University. Simply put, the South Korean government could be afraid of the political hassles of being held accountable.
Additional reporting by Dahee Kim; Writing by Josh Smith; Editing by Gerry Doyle
- KODAKOne platform and KODAKCoin cryptocurrency | Kodak ... - January 17th, 2018
- Bitcoin-crazy South Korea may face a ban on cryptocurrency ... - January 13th, 2018
- Cryptocurrency - IC Markets - January 13th, 2018
- Kodak launches cryptocurrency, stock pops 125% - Jan. 9, 2018 - January 10th, 2018
- The cryptocurrency bubble is strangling innovation | TechCrunch - January 9th, 2018
- Coinschedule - The best cryptocurrency ICOs (Initial Coin ... - January 8th, 2018
- CCN: Bitcoin, Ethereum, ICO, Blockchain & Cryptocurrency News - January 7th, 2018
- Cryptocurrency boom: Why everyone is talking about ripple - January 4th, 2018
- Cryptocurrency stocks holding gains despite bitcoin pullback ... - December 29th, 2017
- MobileCoin: A New Cryptocurrency From Signal Creator Moxie ... - December 16th, 2017
- Cryptocurrency Definition | Investopedia - December 6th, 2017
- '$300m in cryptocurrency' accidentally lost forever due to bug ... - November 10th, 2017
- Amazon might want in on cryptocurrency - mashable.com - November 8th, 2017
- What is Cryptocurrency - earnlite.com - October 26th, 2017
- Cryptojacking Lets Strangers Mine Cryptocurrency With Your ... - October 21st, 2017
- Introduction to Cryptocurrency - CryptoCurrency Facts - October 14th, 2017
- Cryptocurrency Flash Crash Is Said to Draw Scrutiny From CFTC ... - October 7th, 2017
- Cryptocurrency Alternatives to Bitcoin - due.com - October 7th, 2017
- Learn BitCoin and master the world of cryptocurrency - October 7th, 2017
- Almost Every Cryptocurrency Is Tanking Right Now | Time.com - September 7th, 2017
- Cryptocurrency boom stalls as regulators focus on ICOs ... - September 7th, 2017
- Why Marketers Need to Pay Attention to Cryptocurrency -- Now - Entrepreneur - September 7th, 2017
- Opinion: That Floyd Mayweather-backed cryptocurrency is another sign of a bursting bubble - MarketWatch - September 7th, 2017
- Putin-Backed Political Group Advances 'Green' Cryptocurrency Concept - CoinDesk - September 7th, 2017
- First He Beat Up His Girlfriend, Now He's Selling Cryptocurrency With Paris Hilton - Daily Beast - September 7th, 2017
- Cryptocurrencies have already recovered from last weekend's crash ... - TechCrunch - September 7th, 2017
- Venezuela Cracks Down On Cryptocurrency Mining - CryptoCoinsNews - September 4th, 2017
- Mobius Foresees Cryptocurrency Crackdown Sparking a Rush to Gold - Bloomberg - September 4th, 2017
- The Aggregate Cryptocurrency Market Cap Is Up 810% Year to Date - Motley Fool - September 4th, 2017
- How to make upwards of $1,000 a month by mining cryptocurrency - Mashable - September 2nd, 2017
- Chinese Officials Contemplate Suspending Cryptocurrency ICOs - The Merkle - September 2nd, 2017
- Cryptocurrency Investment Course 2017: Fund your ... - Udemy - September 2nd, 2017
- Six Banking Giants Just Decided to Partner to Create a New Cryptocurrency - Futurism - September 2nd, 2017
- 7 Cryptocurrency Predictions From the Experts - fortune.com - September 2nd, 2017
- Russia Could Pass Cryptocurrency Law This Year, Senior Lawmaker Says - CoinDesk - September 2nd, 2017
- AxionV: AI Cryptocurrency Fund Leading the Way in ICO Security - HuffPost - September 2nd, 2017
- PayThink Custom tokens are the future of cryptocurrency - PaymentsSource - September 1st, 2017
- Litecoin Prices Surge Above $70 as Crypto Market Tops $175 Billion - CoinDesk - September 1st, 2017
- Dharma wants to let anyone borrow a small amount of cryptocurrency - TechCrunch - September 1st, 2017
- PR: Archain Is Building an Uncensorable Internet Archive Inside a Cryptocurrency - Bitcoin News (press release) - August 31st, 2017
- Cryptocurrency Market Just Reached Total Value of $160 Billion - Futurism - August 31st, 2017
- Another banking trojan is trying to loot your cryptocurrency wallets - The Register - August 31st, 2017
- Cointal Revolutionizes P2P Cryptocurrency Trading - CryptoCoinsNews - August 31st, 2017
- $160 Billion: Cryptocurrency Market Sets New All-Time High ... - CoinDesk - August 30th, 2017
- Central Banks Can't Ignore the Cryptocurrency Boom - Bloomberg - August 30th, 2017
- Whoppercoin is a cryptocurrency you can eat or trade - The Verge - August 30th, 2017
- Learn about cryptocurrency mining with this interactive blockchain demo - TNW - August 30th, 2017
- Good Morning, Cryptocurrency! Vietnam To Create Legal Framework For Digital Assets - ETHNews - August 26th, 2017
- Cryptocurrency mining may void warranty on Inno3D GPUs - PC Gamer - August 26th, 2017
- Russian Deputy PM Says He Supports a State-Backed Cryptocurrency - CoinDesk - August 25th, 2017
- How to Learn About Cryptocurrency In The Bitcoin Era - Daily Beast - August 25th, 2017
- Bernanke to Give Keynote Speech at October Cryptocurrency Event - Bloomberg - August 25th, 2017
- Estonia wants to launch its own government-backed cryptocurrency called 'estcoin' - CNBC - August 25th, 2017
- Aimwise to Create Standards for Cryptocurrency Crowdsales - newsBTC - August 25th, 2017
- A Mysterious New Cryptocurrency Is Surging After Being ... - August 25th, 2017
- Cryptocurrency Cyber Crime Has Cost Victims Millions This Year - Bloomberg - August 25th, 2017
- This European country may hold an ICO and issue its own ... - TechCrunch - August 23rd, 2017
- Bitcoin Skeptic Mark Cuban to Invest in Cryptocurrency ... - August 23rd, 2017
- $150 Billion: Total Cryptocurrency Market Cap Hits New All-Time ... - CoinDesk - August 23rd, 2017
- Cryptocurrency Market cap Sets a New All-time High of Over $150bn - newsBTC - August 23rd, 2017
- South Africa's Central Bank: It's 'Too Risky' to Launch a Cryptocurrency - CoinDesk - August 23rd, 2017
- Mark Cuban backs new $20 million cryptocurrency venture fund - CNBC - August 22nd, 2017
- VR World Decentraland Raises $25.5 Million In Cryptocurrency - UploadVR - August 21st, 2017
- AMD Releases Beta Graphics Driver for Better Cryptocurrency Mining - Bitcoin Magazine - August 21st, 2017
- Philippines Central Bank Grants First Cryptocurrency Exchange Licenses - CoinDesk - August 21st, 2017
- Media A-Listers Back eSports Betting Firm As It Dives Into Cryptocurrencies - Deadline - August 20th, 2017
- 10 Reasons Why Central Banks Will Miss the Cryptocurrency Renaissance - CoinDesk - August 20th, 2017
- Australia Weighs Jail Time for Cryptocurrency Exchange Offenders - CoinDesk - August 20th, 2017
- Cryptocurrency wallet Exodus adds OmiseGo in latest update - CryptoNinjas - August 20th, 2017
- SEC Statements Spur ShapeShift to Review Cryptocurrency Listings - CoinDesk - August 20th, 2017
- Australian money cops gain powers to regulate cryptocurrency - The Register - August 18th, 2017
- Could Cryptocurrencies Replace Cash? - Investopedia - August 18th, 2017
- NVIDIA CEO Believes Cryptocurrencies Have Longevity - Investopedia - August 18th, 2017
- Substratum Launches Substrate Cryptocurrency to Power the New Decentralized Web - The Merkle - August 18th, 2017
- More Evidence that Cryptocurrencies Are a Bubble? - Investopedia - August 16th, 2017
- Cryptocurrency Exchange ShapeShift Acquires Bitcoin Wallet Startup - CoinDesk - August 16th, 2017
- Canada Approves First Cryptocurrency Sale in Property Rights Shake-Up - Voice of America - August 16th, 2017
- From UFC To Fighting Fake News With Cryptocurrency - SportTechie - August 16th, 2017
- Will the Bitcoin Fork Continue to Boost the Cryptocurrency's Value? - TheStreet.com - August 16th, 2017
- 'Father of Financial Futures' Seeks Cryptocurrency Hardware Patent - CoinDesk - August 14th, 2017