Cryptocurrency Regulation – South Korea’s Impact
Crypto-traders can breathe a sigh of relief. One of the biggest fears and speculations that had the crypto world on edge in recent weeks was South Korea’s legislative maneuvers regarding cryptocurrency regulation. Many reports leading into the month of January indicated that the South Korean government was considering an all-out ban on cryptocurrency and crypto-markets, citing fears that it was hindering their anti-money laundering initiatives. However, the most recent statements from the government have put these fears to rest and it appears that the government has instead chosen the path of greater regulation as opposed to criminalisation.
Following weeks of mixed messages from officials, the government officially announced in a statement released on January 23rd details of the new cryptocurrency regulation that kicked in on January 30th. While we are yet to see the full impact of the regulations, officials highlighted that the new regulations would only allow cryptocurrency trade from real-name bank accounts. The justification for this stipulation is that it allowed banks to comply with their “Know Your Customer” and anti-money laundering obligations.
While regulation may be perceived as a restrictive and slightly negative thing, it has its benefits and is potentially an aspect that the crypto market needs.
Why is intelligent cryptocurrency regulation not a bad thing?
In one of our previous articles, we identified an instance where regulators were attempting to regulate the crypto-market without having a comprehensive understanding of key aspects within the blockchain and crypto world. Therefore, when we say, “cryptocurrency regulation is not entirely a bad thing”, what we are referring to is intelligent and knowledgeable regulation. With more governments, including the United States and France, recognising cryptocurrency as non-detrimental to conventional financial systems, talks of regulating the market have largely been centred around preventing and alleviating criminal activity. Cryptocurrency regulation could actually help the market in the long run – here’s how:
Enabling legitimisation and recognition – One of crypto’s biggest obstacles has been its challenge in being recognised as a legitimate investment option across the world. While this image has experienced a noticeable transformation in recent years, with the likes of Bill Gates investing in crypto, its illegality and imposed bans within various countries across the world has hindered its rise. If more countries were to opt for regulation over outright bans, crypto would appear more legitimate to investors, thereby fostering greater interest. Regulation would also improve crypto’s legitimacy, given that it would help eliminate the presence of illegal and unethical activities like money laundering and terrorism. This has been one area that the crypto-world has always been chastised for and regulation could play a significant role in curtailing this.
Provide greater stability – On one hand, a lack of overregulation can create an environment where cryptocurrencies and blockchain-based startups can grow their operations with relative ease and assurances that they will not be interrupted by governments acting hastily. However, at the same time, the lack of a regulatory framework and a solid set of rules in place may make investment riskier, given the prospects of a big policy or shift in taxation in the future. China is the perfect example of this, given that just five years ago, BTC China was considered the largest crypto-exchange at the time. However, a few years later (back in September), the government instituted a comprehensive ban on cryptocurrency – a significant shift for such a short period of time.
Data vulnerability implications and how #IAMEidentity comes into play – More countries are adopting the regulatory approach, with the goal of curtailing money laundering and criminal activity. Therefore, it is very likely that a rendition of South Korea’s “Know Your Customer” approach will be applied in other countries as well. This means that more personal information – names, ID numbers, SSNs, to name a few – will increase in circulation and, subsequently, be more vulnerable to theft. Organisations need to employ strong security and preventative measures to ensure the protection of their clients’ personal information. Here’s where IAME comes in.
The IAME decentralised fragmented identification system transforms the identification process by fragmenting meaningful data into individual components of identification data – think jigsaw pieces in a puzzle – and shares each fragment with a group of third-party validators, who then verify each component assigned to them. The result of this is that the data sharer would be the only person with knowledge and access to all the data in a meaningful way.
If you would like to know more, please visit our Website and read our White Paper. Any feedback, comments, or questions can be asked directly to our team by visiting our Telegram Channel. For updates on IAME, you can follow us on Linkedin, Facebook or Twitter. Stay tuned to our blog series, for more of the latest news in the crypto and blockchain realms.