South Korea Officially Legalizes Bitcoin, Price Races Towards $4000 Mark

23 Jul, 2017 16:39 IST|Sakshi
Last week’s bounce back from $1850 after a correction, the upward movement of Bitcoin price is faster than expected. 

South Korea has officially legalized international Bitcoin transfers and is on the verge of providing a regulatory framework for Bitcoin trading platforms and exchanges.

With all favorable conditions for Bitcoin, the price of the leading cryptcurrency is racing towards $4,000. Last week's bounce back from $1850 after a correction, the upward movement of Bitcoin price is faster than expected.

Bear time seems to be getting over. All seems to be falling back in place just in line with the momentum that saw Bitcoin’s price touching the $2,000 mark earlier this year.

That moment seems to have come sooner than expected. The early rise probably turned out to be a major reason for the top digital currency to be racing towards conquering a higher price with little or nothing standing practically in its way.

Earlier this week, miners began to signal for Bitcoin Improvement Proposal BIP 91, a kludge between the original Segregated Witness (SegWit) proposal and the Digital Currency Group-led SegWit2x, also known as the Silbert accord.

Despite its short timeline that may cause difficulties for developers resulting from technical instability, BIP 91 was the last chance for miners and the Bitcoin community to avoid a network split, which would have led to the creation of two Bitcoin Blockchains or Bitcoins.

In contrast to user-activated soft fork, BIP 91 is a miner-activated soft fork, which will activate SegWit, a transaction malleability fix and scaling solution developed by the Bitcoin Core development team at an 80 percent activation threshold, as listed on the SegWit2x proposal.

The 80 percent activation threshold was surpassed on July 18 with major mining pools including Antpool, BTCC and Bitfury signaling for the activation of BIP 91. At the time of reporting, hash rate signaling BIP 91 is at 83.3 percent and analysts including Squeeze have noted that BIP 91 could be fully locked in within the next few days.

South Korean Move Brings Along A Big Trading Opportunity

On July 3, Representative Park Yong-jin of the ruling Democratic Party of Korea revealed that the South Korean government is ready to regulate the Bitcoin market. According to Rep. Park, he submitted three revisions to build a set of regulatory frameworks for Bitcoin users and businesses to further facilitate the growth of the South Korean bitcoin market and industry.

One of the revisions Rep. Park proposed to the financial regulators of South Korea requested Bitcoin businesses and trading platforms to retain capital of at least $436,000 and data processing facilities for Know Your Customer (KYC) and Anti-Money Laundering (AML) purposes.

Son ji-hyoung of the Korea Herald stated:

“Under the bill that aims to revise the Electronic Financial Transactions Act, traders, brokers, or other business entities involved in cryptocurrency transactions would be required to get regulatory approval from the Financial Services Commission. The requirements include the retention of capital of at least 500 million won ($436,300) and data processing facilities.”

Since then, the South Korean government has introduced several regulatory frameworks for the Bitcoin industry. Although the South Korean Bitcoin industry has not been fully regulated as of yet, the South Korean government officially legalized Bitcoin service providers to facilitate payments, transfers and trades.

Local publications including the Korea Herald reported that the newly revised South Korean Foreign Exchange Transactions Act has started to allow fintech companies and Bitcoin service providers to be approved by the Financial Supervisory Service (FSS), the financial regulator of South korea.

Like the Philippines, South Korea has officially legalized Bitcoin as a remittance method, allowing fintech companies to process up to $20,000 worth of South Korean won in bitcoin for users.

On February 12, Cointelegraph reported that the central bank of the Philippines officially legalized Bitcoin as a remittance method and as a result, Bitcoin industry in the Philippines experienced a surge in growth. Leading companies including Coins and Satoshi Citadel Industries raised tens of millions of dollars in funding and recording hundreds of thousands of new users. The central bank of the Philippines said:

“The Bangko Sentral does not intend to endorse any VC, such as Bitcoin, as a currency since it is neither issued or guaranteed by a central bank nor backed by any commodity. Rather, the BSP aims to regulate VCs when used for delivery of financial services, particularly, for payments and remittances, which have a material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability.”

When the South Korean government fully regulates the Bitcoin market and industry in the near future and further legalizes Bitcoin as a digital currency on top of a remittance method like Japan, trading volumes of the South Korean Bitcoin exchange market will likely record an exponential growth rate.

Already, according to market data sources, the South Korean Bitcoin exchange market processes over 14 percent of global Bitcoin trades, the third largest market behind the US and Japan.

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