South Korea Crypto Crackdown Causes Correction; but No Ban

More South Korea FUD: Facts and Insight Into the South Korea Crypto Crackdown and “Trading Ban” That Isn’t Really a Trading Ban

A crackdown on crypto exchanges in South Korea caused a crypto correction. With that said, there is no ban in the short term and it is likely domestic exchanges will be regulated and not shut down in the long term.[1][2][3]

Essentially what happened is this (this being my take on the facts):

  • South Korea is one of the biggest markets for cryptocurrency (AKA crypto).
  • Their domestic exchanges tend to see coins bidded up higher than other exchanges (for example coins tend to trade for higher prices on South Korean exchanges than on U.S. or Japanese exchanges).
  • South Korean regulators had been planning to regulate exchanges. So the news is not new news in some respects.
  • However, instead of just regulating, the Ministry of Justice orchestrated a raid on some exchanges and announced they would move to ban domestic exchanges.
  • Specifically, two of South Korea’s biggest exchanges, Coinone and Bithumb, were raided by police and tax authorities according to the Reuters report. See: South Korea plans to ban cryptocurrency trading, rattles market.
  • Meanwhile, the South Korea Ministry of Strategy and Finance reportedly does not agree with the Ministry of Justice’s stance and actions. See: ‘Nothing Finalized’: South Korea Gov’t Ministries Diverge Over Crypto Ban Proposal.
  • It is very likely this will end up playing out the same way the China ban did (where some of the worst practices of cryptocurrency were regulated, not banned).[4]
  • Whatever the case, South Korea ended up being at the heart of two corrections this week. First, Coin Market Cap removed key South Korean exchanges from its database causing a panic (their prices are higher, so removing them brought the value of all crypto down on paper and people responded by panic selling). Second, the raids and announcement of a domestic ban in South Korea caused the internet to panic sell again.
  • Despite all the panic selling most coins, the fact is almost every coin that wasn’t actively running, found support and the bounce back was quick.

TIP: The highly cited today Asian market analyst Joseph Young assures us “there is not trading ban in the short term and nothing is finalized.” See the Tweet below and “Ministry of Justice Virtual Currency Exchange Closed…” from

The main takeaways here are (this being a mix of opinion and fact):

  1. In the short term, crypto trading will continue, long term regulations are not set in stone yet. There is likely a bit of a battle ahead and some regulation is to be expected, but this is hardly a “total ban of crypto in South Korea.”
  2. The global crypto market is becoming resilient. When China cracked down on crypto back in the summer it caused a deep correction and was followed by a slow recovery. Since, each bit of like-kind news has had a smaller and smaller effect on the global crypto market. The resilience might be seen as a good sign that the global crypto market is strong.
  3. Lastly, although regulation is a touchy issue in the world of decentralized global digital assets, it’s hard to ignore all the countless Won, USD, Yen, AUD, EURO, i.e. dollars that get funneled to nowhere via pump and dumps, shady ICOs, “insider trading,” questionable lending schemes, etc. A little bit of light regulation that hampers the bad, but doesn’t hamper the general population in their trading, could result in a healthier crypto market. Every dollar sent into the void is a dollar that can’t be used to buy the dip on a quality coin. Every scammer only in it for the fiat, is another Bitcoin that gets converted to a dollar (thereby holding back potential natural growth in price).
Article Citations
  1. South Korea plans to ban cryptocurrency trading, rattles market.
  2. Bitcoin tumbles on reports South Korea will ban all cryptocurrency trading.
  3. ‘Nothing Finalized’: South Korea Gov’t Ministries Diverge Over Crypto Ban Proposal. CoinTelegraph.
  4. “Ministry of Justice Virtual Currency Exchange Closed…”.

Author: Thomas DeMichele

Thomas DeMichele has been working in the cryptocurrency information space since 2015 when was created. He has contributed to MakerDAO, Alpha Bot (the number one crypto bot on Discord),...

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