The Korea Times close
National
  • Politics
  • Diplomacy
  • Defense
  • Labor & Environment
  • Law & Crime
  • Health & Welfare
  • Embassy
  • Seoul & Provinces
  • Education
  • Foreign Communities
  • Obituaries
  • Multicultural Youth Award
Biz & Tech
  • Auto
  • IT
  • Game
  • Manufacturing
  • Retail & Food
  • Energy
  • Construction
  • Airlines
Finance
  • Policies
  • Economy
  • Markets
  • Banks
  • Non-banks
  • Economic Essay Contest
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to the Editor
Lifestyle
  • Arts
  • Books
  • Travel & Cuisine
  • Trend
  • Fashion
  • Around Town
  • Fortune Telling
Entertainment
  • K-pop
  • K-dramas & Shows
  • Movies
  • Music
  • Performances
  • Asia Model Festival
Sports
  • Football
  • Golf
  • Baseball
  • Other Sports
World
  • Asia Pacific
  • Americas
  • Europe & Africa
  • SCMP
Video
  • On the Spot
  • Feature
  • News
Photos
  • Photo News
  • Darkroom
Community
  • The Korea Times
  • search
  • Site Map
  • E-paper
  • Subscribe
  • Register
  • LogIn
search close
  • The Korea Times
  • search
  • Site Map
  • E-paper
  • Subscribe
  • Register
  • LogIn
search close
Finance
  • Policies
  • Economy
  • Markets
  • Banks
  • Non-banks
  • Economic Essay Contest
Sat, January 23, 2021 | 06:36
Economy
Should virtual coin trading be banned?
Posted : 2018-01-17 15:17
Updated : 2018-01-18 09:08
Mail
Print Preview
Font Size Up
Font Size Down
Regulations should be focused on ensuring transparency from exchanges

By Kim Jae-kyoung

Financial markets hate uncertainty because uncertainty invites speculation.

The government's role should be to stabilize markets and prevent speculation by removing uncertainty.

Ironically, the Korean financial authorities are doing the opposite when it comes to virtual currencies.

Markets fluctuate every time the government announces new plans. The government vowed to regulate trading of digital coins to root out speculative investment but its actions are instead causing chaotic runs on markets.

The biggest culprit behind this mess is policymakers' indecisiveness, which many believe is caused by their lack of understanding of digital coins, and poor coordination among ministries.

To address this issue, what President Moon Jae-in and his administration must do first is to clarify its position on a possible shutdown of cryptocurrency exchanges.

It is still debatable but most analysts argue that banning the trading of virtual coins is not a fundamental solution.

Jeffrey Jones, an international lawyer at Kim & Chang, said the government's idea of banning the exchanges is based on its fears of a bubble bursting compounded by its lack of understanding of cryptocurrencies and their impact on the economy.

"Banning the exchanges will only cause the transactions to go underground and the ban won't stop the trading," he told the Korea Times.

"I do believe that rather than seeking to ban the trading of cryptocurrencies, it would be much more productive to regulate and tax the transactions," he added.

He recommended three regulatory recommendations _ 1) individuals should be required to open an account in their real name; 2) accounts should go through the same "know your client" due diligence as typical bank accounts; and 3) anti-money laundering provisions should be applicable.

Should casinos be outlawed?

Massimo Massa, professor of finance at INSEAD's Singapore Campus, is also against bans per se.
"Trading cryptocurrencies as of now, is it like betting or gambling? Should casinos be outlawed?" he asked.

"The simplest way would be to have disclosure and/or restrictions of trades that restricts to sort of qualified investors, the same restrictions that discriminate between trading in regulated stocks exchanges and OTC (over-the-counter)," he added.

These views come as prices for digital coins have fluctuated after the government flip-flopped on policies on the decentralized currencies.

Last Thursday Justice Minister Park Sang-ki announced the ministry was preparing a bill to ban trading, but a day after Cheong Wa Dae said that a ban had not yet been finalized.

On Jan. 11, Finance Minister Kim Dong-yeon said a potential shutdown of exchanges was still on the table, adding the government would soon unveil a set of measures to crack down on the "irrational" investment craze for digital coins.

David Drake, chairman of The Soho Loft and LDJ Capital, a New York City-based family office that invests in bitcoins for clients, said that banning cryptocurrency trading means eradicating the freedom of capital for individuals in Korea.

"It would be disastrous to the whole global community to see them making that decision. What they should be doing is implement transparency at the exchanges," he said.

"Exchanges should have more demand for transparency and accountability."

Troy Stangarone, senior director of congressional affairs and trade at the Korea Economic Institute of America, said that with trading in cryptocurrencies becoming more widely spread, we should expect more regulation.

"At this point, the real question is what rules should be put in place to protect consumers and the investments they make, while ensuring that digital currency exchanges are secure enough to prevent them from being exploited by nefarious actors," he said.

He explained that while traditional currencies are backed by governments, cryptocurrencies lack the support a traditional currency would have should widespread hacking or other crises take place, as seen with exchanges hacked by North Korea.

Get-rich-quick scams?

However, there are still some experts who believe that cryptocurrencies are fraudulent investment scams and thus should be totally banned.

"Cryptocurrencies are Ponzi schemes. In any Ponzi scheme, people who are involved will oppose a clampdown because they can make money from pulling in more ‘fools,'" said former Morgan Stanley economist Andy Xie.

"A Ponzi scheme is illegal and should be banned," he added. "Cryptocurrencies are not money. People who call it money are trying to fool people who don't know what's going on."

In his view, a new element is that cryptocurrencies are created in the west and sold to Chinese, Korean, and Japanese people.

"These people save money and are frustrated by the low interest rate and are easily sucked into get-rich-quick scams," he said.

"I'm afraid that the internet scams have become the new channel for wealth redistribution from the East to West."



Emailkjk@ktimes.com Article ListMore articles by this reporter









 
WooriBank
 
  • [INTERVIEW] Ex-US envoy calls China 'malign influence,' urges Seoul to join new alliance
  • Samsung Electronic seeks Intel chip outsourcing deal
  • [INTERVIEW] Climate change revolutionaries: Why students in Korea hit the streets
  • Woman gets suspended jail term for assaulting mother-in-law
  • Growing number of Koreans refuse life-sustaining treatment
  • Korea gears up to start COVID-19 vaccinations next month
  • Biden orders masks, travel clampdown in new war on COVID-19
  • 'Bidencare' triggers optimism among Korean healthcare firms in US
  • [INTERVIEW] Korea urged to brace for side effects of 'Bidenomics'
  • 'No likelihood of North Korea collapse with Kim in complete control'
  • Why have K-pop dance practice videos become so popular? Why have K-pop dance practice videos become so popular?
  • Seolhyun's first social media posts since AOA bullying scandal get mixed reactions Seolhyun's first social media posts since AOA bullying scandal get mixed reactions
  • [K-POP INTERVIEW] What are MOMOLAND's comfort foods? [VIDEO] [K-POP INTERVIEW] What are MOMOLAND's comfort foods? [VIDEO]
  • Korean National Ballet, KBS criticized for dangerous filming location Korean National Ballet, KBS criticized for dangerous filming location
  • [INTERVIEW] Model-turned-actress Jang Yoon-ju talks about becoming fearless on screen [INTERVIEW] Model-turned-actress Jang Yoon-ju talks about becoming fearless on screen
DARKROOM
  • Biden takes office as 46th president [PHOTOS]

    Biden takes office as 46th president [PHOTOS]

  • Biden-Harris inauguration is taking shape

    Biden-Harris inauguration is taking shape

  • Second Trump impeachment

    Second Trump impeachment

  • Pro-Trump rioters breach the US Capitol

    Pro-Trump rioters breach the US Capitol

  • Our children deserve better (Part 2)

    Our children deserve better (Part 2)

WooriBank
  • About Korea Times
  • CEO Message
  • Times History
  • Content Sales
  • Media Kit
  • Contact Us
  • Location
  • Privacy Statement
  • Terms of Service
  • Mobile Service
  • RSS Service
  • Ombudsman
  • hankookilbo
  • Dongwha Group
  • Code of Ethics
Copyright