South Korea, regulation, FUD and the fall of the stock market: one classification

In recent days, the news from South Korea rolled over: a new name tracking system, the exclusion of foreign customers at banks, money laundering guidelines.

While the world usually observes the northern neighbor of the East Asian state, the crypto world looks to the south. What is happening there at the moment shows that we are still at the beginning of a rapprochement. It is the approach of a new technology that meets old structures. That it crashes every now and then may not be further surprising. But let's get an overview first.

South Korea, the new tracking system & insider trading
As we reported earlier , the government in South Korea has developed a system to verify the authenticity of names. This is a regulatory measure: it will therefore be mandatory for South Korean stock exchanges to share information about transactions with the government. Obviously, the goal is to reduce the often celebrated advantage of cryptocurrencies: anonymity.

For example, the new system is intended to check the authenticity of the new system and, in addition, users will only be able to register with their real names. Banks that use the system include Nonghyup Bank, the Industrial Bank of Korea, KB Kookmin Bank and Shinan Bank. Banks will first apply the system to accounts that already exist. Until they have checked all existing accounts, new registrations will be blocked. In addition, the South Korea Financial Intelligence Unit plans to publish anti-money laundering guidelines. The system was implemented on January 20th.

With the control of names, the authorities also want to prevent young people from getting entangled in the trading of cryptocurrencies. This would "corrupt" them, as the government fears. Furthermore, the government announced that it would act against market manipulation in the future.

Interestingly, the problems in this area were identified in their own ranks. Government officials are suspected of doing insider trading. Officials are said to have initially invested properly in Bitcoin, and then auscashen shortly before the regulatory announcements.

What is ultimately to be suspected behind the move, is also the taxation of trades. As reported South Korean media that soon they rise up to 24.2% tax on income that comes from trading on stock exchanges crypto. Bithumb, South Korea's largest cryptocurrency trading platform, is said to pay $ 56 million in taxes. Other stock exchanges like UpBit, Coinone and Korbit will affect that as well. From 30 January, it will be possible, according to reports from the banks again, to open new accounts - then ultimately only under the real name.

The arrangement
First, the events show the aforementioned clash of "old" structures and "new" technology. What makes cryptocurrencies interesting for many is the underlying idea of ​​anonymity. Motivations or not, for many - especially in the financial sector - anonymous transactions are interesting.

That this is not necessarily in the interest of a state, is obvious. If financial transactions are incomprehensible, they can not be taxed. Moreover, if the identity of account holders can not be established beyond doubt, the authorities will lose control.

And something else is obvious, if not so obvious. If the government now announces that anonymity is no longer guaranteed and crypto exchanges have to pay taxes in the future, that scares off many. The Impact: FUD (Fear, Uncertainty and Doubt / Fear, Uncertainty and Doubt). If many frightened people bargain quickly before the regulation hits the biggest stock exchanges in the world, it will certainly affect the price in one way or another.

The stock exchanges will find their way
But as the look into the past teaches us, this panic on the one hand is almost typical for such a new market and on the other hand it is exaggerated. When China announced last year the ban on ICOs and widespread regulation , the panic was similar to the recent days. The course fell drastically, the bubble had burst again. Most of our readers know that it went up steeply afterwards : In December, an all-time high chased the next one. The affected stock exchanges finally migrated , mainly to Hong Kong or Japan.

Surely the future is uncertain, the course can continue to slide. Also, fluctuations can never be explained by only single events - often correlate numerous events and the still very young crypto market settles somehow. (Especially in this context, one must also mention the Bitcoin Futures and ETF .)

One last thing: Maybe the "new" technology will manage to get out of the "old" system in the future. Ultimately, it is events like those in South Korea where decentralized technology is incorporated into institutional structures that hinder development. A grip on your own nose could help here; After all, Blockchain's basic principle is to make decentralized organization possible without state interference.