South Korea, along with Singapore has been one of the biggest cryptocurrency hotspots in the world. Not only are the economies of both countries crypto-friendly but both offer stable trading platforms that are free from the political volatility of countries like India – a major cryptohub, but nevertheless a country that ping-pongs back and forth between too little and too much regulation.
South Korea recently decided to regulate crypto trading in the form of a tax on exchanges. While this move was unpopular among some traders for obvious enough reasons, the move showed that the South Korea authorities are willing to implement practical and practicable mechanisms to ‘normalise’ the use of cryptocurrencies which can have the effect of stabilising markets in an age when some countries aren’t sure whether to embrace the new digital blockchain technology or ban it.
Two signs from two extremely different places have confirmed that both at a private sector level and at a state sanctioned level, cryptocurrencies are not only here to stay but that their status as a viable trading mechanism and savings/investment vehicle are being rapidly normalised. First of all, Venezuela has led the way in establishing a state sanctioned cryptocurrency whose value is pegged to Venezuela’s oil market. Presales of ‘El Petro’ have thus far been bullish, even though the US Treasury issued an order forbidding US citizens from buying ‘El Petro’ due to America’s continued sanctions war with the Bolivarian Republic.
On the opposite end of the socio-economic spectrum, after downplaying cryptocurrencies for years, Goldman Sachs says that they will begin trading in cryptocurrencies. This news has shot the price of the world’s leading crypto Bitcoin up towards the $10,000 mark after taking a nosedive in early 2018.
Now, South Korea looks to follow Venezuela’s footsteps and start its own cryptocurrency, something that Russia is also planning to do this year. According to the Bank of Korea,
“A taskforce has been studying the possibility of issuing a CBDC and how digital currencies will influence the country’s overall financial sector since January. We will announce updates on this issue by the end of June”.
This news is not only interesting because it confirms that a wealthy state is considering embracing cryptocurrency at an official level, but unlike Venezuela, Russia and Iran who are all in the midst of either releasing or preparing to realise an official state-crypto, South Korea is not subject to the kind of sanctions and threats of hostility that the others are. Thus, while for Caracas, Moscow and Tehran cryptos are yet another for of sanction busting de-dollarisation, for South Korea it is merely a way to expand an already western aligned market with Asian characteristics into a new and growing market.
Furthermore, unlike Venezuela’s ‘El Petro’ which is legally off-limits to Americans because of Washington’s sanctions regime, a South Korean currency would likely be as open to those in the US as private sector coins like Bitcoin, Ethereum, Litecoin or Dash.
Of course when it comes to sanctions, South Korea’s northern neighbour is the most sanctioned country on earth. But as Kim Jong-un and Moon Jae-in prepare to sign a peace treaty to formally end the Korean War/Fatherland Liberation War and as Donald Trump is set to announce the time and place of the fist ever meeting between a sitting US President and a DPRK head of state, the economy of North Korea may soon become more connected to South Korea, China, Russia and the wider world.
As a means to attract more investment to the DPRK, South Korea could foreseeably work with Pyongyang on a cryptocurrency investment scheme where a Seoul regulated crypto could be used by international investors to pour funds into the DPRK, a country which below the radar is already experiencing an economic boom thanks to Kim Jong-un’s economic reforms which while not nearly as radical as those implemented by the great Chinese reformer Deng Xiaoping, have nevertheless seen very early signs of a Korean version of market socialism take shape.
The potential for both small and large investors to pump digital coins into the North Korean economy via a cooperation scheme with Seoul could help to integrate the economies of the two Korean states in a manner that is cost effective and pioneering and moreover, one with potentially huge returns for both Koreans and international investors.
South Korea has displayed an ability to adapt to the realities of cryptocurrency trading in a mature and realistic way and now with the possibility of more commerce being conducted between Pyongyang and Seoul, a crypto-investment found could be the answer to taking the positive political developments in Korea and helping to expand the economy of the DPRK while increase cooperation across the 38th parallel and the wider world.