Banks In South Korea Banned For Dealing in Cryptocurrencies Such As Bitcoin

South Korea had been apprehensive of virtual currencies since the very beginning. It recently issued a ban on all dealings entered into using crypto currencies like Bitcoins by financial institutions. This announcement came at a time when the price of Bitcoin has boomeranged to record figures fuelled by a series of events which created an upsurge in flow of money from both institutional and retail investors alike.

Also Read: South Korean Central Bank Chief Says, “Bitcoin Is A Commodity And Not A Currency

In spite of emerging as a hotbed of crypto trading leading to 20% of global Bitcoin transactions, the South Korean regulators since the very beginning had been propagating about the risks associated with Bitcoins. One million South Koreans of which many are small-time investors own Bitcoins in virtual wallets. Such is the magnanimous demand of Bitcoins in South Korea, that it is being traded at 20% premium in the local exchanges compared to the US markets. The global price of Bitcoin has undergone a meteoric rise this year starting from below $1000 figures in January to presently lingering around $17000 figures. Chicago Board Options Exchange (CBOE) has started with its trading of Bitcoin futures from last Sunday. This is the first-time Bitcoin has appeared on such a traditional platform. Such bitcoin futures is also expected to roll-forward its trading in the rival Chicago Mercantile Exchange, from 18^th December.  An official of the South Korean Minister revealed that financial institutions in Seoul shall henceforth be banned from dealing in crypto currencies which include the likes of possessing, buying or holding the same as a collateral. Following this announcement, the price of Bitcoin underwent a steep fall by 5% in Bithumb, the biggest crypto exchange in South Korea.

Also Read: South Korean Bitcoin Exchanges Might Soon Be Regulated By Its Financial Authorities 

This is also going to outlaw initial coin offerings which is increasingly been used by start-up firms to raise their required corpus. This was revealed through a press statement held at the Prime Minister’s office. Investor protection rules shall also be strengthened by the government to keep them at bay from chances of potential fraud. Financial Services Commission of South Korea ordered a ban on all ICOs in September by declaring that, “cryptocurrencies are neither money nor currency nor financial products”.

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