April 24, 2024

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[THE INVESTOR] The government on Jan.15 softened its stance on cryptocurrency trading, saying that while real-name transactions will continue to be mandatory, shutting down exchanges is not yet being considered.

“The Justice Minister’s proposal (last week) to shut down virtual currency marketplaces was only one of the many discussions that took place on measures to curb market speculation,” said Jung Ki-joon, head of the Office for Government Policy Coordination, in a media briefing.

A pedestrian walks by a cryptocurrency trading board in Seoul.

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Criticism has been mounting on the government’s tough stance regarding digital currencies while ignoring “sound investors” who are losing money due to its frequent announcements. Over the past copuple of weeks, cryptocurrency prices have dipped whenever a new policy measure was announced.

Industry watchers said the government should be more careful in picking its battles now that it’s obvious just how strongly people feel about regulating cryptocurrency, or any new type of investments that should be left to the markets.

“Not only are there no legal grounds for shutting down exchanges, but the government also needs to know that there are already close to 3 million Koreans who consider cryptocurrencies as assets, so it’s going to be difficult to reach a consensus on regulations,” said Lee Byung-tae, professor of business administration at KAIST.

The government has maintained that aside from considering exchange closures, it would keep a close eye on all transactions to detect market manipulation, money laundering and tax evasion through a task force composed of the police, prosecutor’s office and other “appropriate regulatory agencies.”

Discussions are currently underway among different government agencies and ministries to chart out the future course of action.

The Moon Jae-in administration has recently come under flak for announcing stringent rules aimed at stifling cryptocurrency trade. Public fury was reflected in the number of signatures collected for a petition opposing the regulations -- reaching 200,000, the minimum number required for getting an official response from the presidential office. It is the seventh such petition to reach the mark.

By David Kim (davidkim@heraldcorp.com)