As reported on Twitter earlier today by crypto reporter, Joseph Young, it appears that the finance minister for South Korea has finally decided to give Bitcoin exchanges the thumbs up:
The article, in specific, that was linked was written in Korean, but fortunately, Google Translate can help us out with assessing what is being said in the article (for those that can not read Korean):
한국블록체인협회는 지난 26일 국회 정무위원회 국정감사장에서 암호화폐 거래소에 대한 은행권의 가상계좌 발급에 문제가 없다는 최종구 금융위원장의 입장 전환에 30일 환영의 뜻을 밝혔다.정무위원회 소속 전재수 더불어민주당…
In the article it states that the Korean Blockchain Association recently gained confirmation from the Chairman of the Finance Minister in South Korea that banks in the country will again be allowed to service cryptocurrency exchanges in the nation.
In essence, the finance minister stated that as long as banks can verify that exchanges are adhering to KYC/AML practices, there would be no prohibitions on banks opening accounts for crypto exchanges.
This is Positive (Bullish) News
As noted in Joseph Young’s original Twitter post, this is something to be ‘bullish’ and ‘optimistic’ about because, evidence exists to suggest that Korea’s prior decision to ban banks in the country from hosting accounts for crypto exchanges obviously crippled the viability and functionality of many exchanges in the country.
This story below by Reuters provides a recap of the decision that was made by the South Korean government toward the end of January 2018:
South Korea will ban the use of anonymous bank accounts in cryptocurrency trading from Jan. 30, regulators said on Tuesday in a widely telegraphed move designed to stop virtual coins from being used for money laundering and other crimes.
As noted in the article, there were a few reasons for the ban:
A) Multiple exchanges were being hacked
B) The fervor in South Korea surrounding crypto investment had gotten to the point where individuals were harming themselves because of losses in the market.
C) There was widespread fear about the potential impact of a crypto ‘fallout’ on the general markets.
Taking a Look at the Reduction in Volume for the Korean Won
As many will tell you, the announcement from the Korean finance minister that they will be allowing banks to host accounts for cryptocurrency exchanges is huge because it will now enable traders in the country to pay with the Korean Won.
According to price data from CryptoCompare, over 1/5th of the trading volume for Bitcoin in November 2017 (before the bank prohibition in Korea) was driven by the Korean Won.
Korean Won is delineated by the ‘KRW’ acronym in the chart above.
However, after the ban occurred (on January 22nd, 2018), the Korean Won accounted for as little as 4.5% of all traded volume of Bitcoin during some periods.
The Korean Won is delineated by the ‘KRW’ symbol in the chart above
Now, following the loosening of restrictions on the Korean Won as well as the announcement by Korea’s finance minister, the volume has ascended to account for up to 18.63% of all traded volume of Bitcoin among the currencies.
Effect on Bitcoin Price
Despite the sudden rush of Korean Won entering into the market, the price of Bitcoin has remained fairly stagnant. However, it’s worth mentioning that prior research (not published yet) by the Zerononcense team has detected that the majority of Korean Won appears to be getting funneled into ‘altcoins’ (coins that are not Bitcoin) rather than just Bitcoin purchases itself.
Take the information above with a grain of salt until it can be corroborated with our published due diligence and research. In the meantime, it is worth monitoring the markets to ascertain when or if the Korean Won will begin having a palpable and demonstrable impact on the cryptocurrency market. With such a sudden influx of volume from the currency, it is a bit puzzling as to why the price in the market have stagnated and, to a certain extent, have even declined.