I appeared on Coin Talk, a podcast run by Jay Caspian Kang of the New York Times and Aaron Lammer of longform.com about cryptocurrency, in order to discuss the digital currency mania in Korea. A lightly edited excerpt from the transcript:
Aaron Lammer: Yeah, what should we expect from Korean crypto in 2018?
Nathan Park: In my view, this has become a major priority in the Korean domestic policy making. In 2018, you will see a major policy and some level of major regulation. There’s already the KYC ["Know Your Customer" rules] element to it, which is a pretty strict and significant thing, as in you can only trade in real names.
Jay Kang: Is that to limit out some of the Chinese money laundering?
Nathan Park: That is certainly the case. The KYC element is there to prevent money laundering basically, and just by strictly implementing the KYC regulations means that a lot of the incentives to trade through Korea will be gone now, because the reason why there was so much volume in Korea was to do money laundering. I expect the KYC rules to be implemented pretty strictly. Also, a shutdown of all exchanges is a possibility. . . .I do know that it is in the cards. It is an option that the Korean government is considering very seriously. I don’t know if they will actually do it. Currently the expectation is they won’t do it.
If I would point to just one takeaway from the discussion, it would be that the Korean government regulation of digital currency is coming soon. The speculative mania for digital currency is reaching a fever pitch in Korea such that it managed to become one of the top domestic agenda priorities for the Korean government. Considering much of the reason behind such active cryptocurrency trading in Korea is money laundering, even a relatively light level of regulation would significantly affect the manner in which the money flows in the digital currency sector.