South Korea had announced plans to control and regulate the Bitcoin and other cryptocurrencies, with one such option being considered was a ban on the trade of cryptocurrencies themselves. However after much deliberation and drama which saw a senior South Korean official being outed for insider trading with regards to the Bitcoin and a large outcry in South Korea against the ban, it seems like the South Korean government has determined such a potential ban as being largely ineffective. Instead they will look for other options with regards to dealing with market manipulation, money laundering and fraud.
Further outrage against the move was caused when the government began to review the countries largest 6 Banks which led to Shihan bank suspending services for crypto exchanges and suspending accounts of those involved in the trade. This in turn led to calls for a mass boycott against the ban which forced the Bank to revise its decision. According to newswire even if draft legislation is passed, it will require a majority vote from the 297 members of the National Assembly, a process which can take years.
Why would such a ban be ineffective?
The ban on Bitcoin related activities would largely be ineffective according to the co-founder of BitMEX Hayes who stated the Bitcoin trade and mining can only be effectively banned is if the Government disconnects the internet all together. However even then there are ways to get around it, in simple terms any outright ban is simply ineffective.
Another example of where the Bitcoin trade has faced a crackdown is China where the Government has banned the use of exchanges and is allegedly is also planning to ban Bitcoin mining itself. However as we saw in China, the largest exchanges that previously traded in china simply launched their contingency plans and began using a P2P based model with severs being hosted in neighboring countries or in Hong Kong, thus effectively bypassing the ban.
Furthermore South Korea’s main aim is not to ban the Bitcoin itself but its main objective and concerns are to do with money laundering, market manipulation and fraud with South Korea’s justice minister echoing the same concerns that the nation has. Their are other effective means of regulating the exchange for those who wish it to be regulated and it appears this is what the South Korean government is aiming for.
What does this mean for the Bitcoin?
For the Bitcoin it certainly is positive news as speculation of a possible ban was the main reason behind the volatility and drop in price. With such news the fundamentals are in place for the price to continue its bullish pattern, however the technicals so far have had the Bitcoin ranging from above the 10,000 to around 12,000 thus creating crucial support at that level which in turn could fuel the next bullish rise.
Furthermore if South Korea is able to deal with the issue of market manipulation it could in turn benefit the Bitcoin and protect from being so vulnerable to manipulation. For example during the SegWit2x saga backers of the Bitcoin cash were able to manipulate and create rumors to cause a price drop in the Bitcoin whilst artificially inflating the price of the Bitcoin cash. Once such rumors were dispelled, Bitcoin regained its dominance and increased in value by a few hundred percent.
To conclude the realization that the Bitcoin cannot be effectively banned and regulated will only benefit the Bitcoin and help further seal its reputation as a safe haven currency. In addition to this the revolution of blockchain technology appears to be inevitable with Nation states such as Venezuela announcing their own cryptocurrencies to help combat issues surrounding fiat currencies.