Finance

South Korea is the 8th country to ban Bitcoin, and it won’t be the last

By Oliver Smith 11 January 2018
Image: Getty/tawatchaiprakobkit.
Summary

The tide is turning against cryptocurrencies.

Panic struck the Bitcoin industry this morning as South Korea became the latest in a growing line of countries to turn against the controversial digital currency.

Algeria, Morocco, Bolivia, Ecuador, Kyrgyzstan, Bangladesh and Nepal have all banned or outlawed the use of Bitcoin to varying degrees.

But South Korea’s imminent ban is seen as the most damaging yet, given the size of the South Korean economy and the popularity of Bitcoin there.

The fallout

The price of Bitcoin fell as much as 21% globally last night in the wake of the move to start planning a full ban – a decision which had already been foreshadowed by South Korea’s warnings about cryptocurrencies last year.

“What we’re seeing is a responsible reaction to irresponsible trading,” Oliver von Landsberg-Sadie, CEO of London-based Bitcoin trading platform BitcoinBro, told The Memo.

Indeed Bitcoin in South Korea has faced several scandals and frauds in recent months, with Bitcoin exchanges being raided by police for alleged tax evasion and high-profile hackings seeing thousands of Bitcoins stolen by criminals.

“I see the South Korea ban as a short-term and healthy price adjustment in a market which has been over-exuberant in the last 2 months,” added von Landsberg-Sadie.

Lewis Tuff, the lead platform engineer at Revolut (which recently added the ability to buy Bitcoin), told The Memo that it’s still unclear exactly what form South Korea’s ‘ban’ would take.

“There seems to be a lot of fake news circulating online and I do not believe there will be a blanket ban coming from South Korea.”

But whatever form it takes, South Korea might not be the last country to turn against Bitcoin.

The China question

Long thought to despise the cryptocurrency which undermines its control over the economy, China has already shut down local exchanges, banned initial coin offerings, and is now looking to shut down Bitcoin mining.

While an outright ban isn’t yet on the cards, many feel it’s only a matter of time before China’s socialist government follows suit.

Likewise, the UK, Europe and the US are all mulling how best to regulate Bitcoin.

If China, the world’s largest economy by some measures, or any of these countries were to outlaw or even just restrict Bitcoin, the impact would be severe.

Bans raise fundamental questions over the value of Bitcoin, and whether the Bitcoin project will ever succeed in becoming a real global currency.

Despite these growing concerns, von Landsberg-Sadie and Tuff both remain optimistic.

“In as little as 10 years, the fiat money system as we know it will be as historically curious and inconvenient as fax machines,” said von Landsberg-Sadie and Tuff added: “Regulation is only a positive step forward for the future of cryptocurrency.”