South Korea is already a major force in cryptocurrency trading. A series of recent announcements could set the Asian country on the path to becoming a crypto transaction powerhouse as well. (For more, see also: Why Is South Korea So Important To Cryptocurrency Prices?)
A report in the Korea Times states that Bithumb, the country’s biggest cryptocurrency exchange, and Pay, a mobile payment service provider, have inked a partnership agreement to enable transactions at 6,000 business outlets across the country by the end of the first half of this year. Bithumb also has a partnership with Yeogi Eottae, South Korea’s largest hotel booking platform. Per that agreement, customers can conduct transactions using cryptocurrencies on the site.
The goal, according to a Bithumb spokesperson, is to “ensure that spending cryptocurrencies is as easy as spending fiat money or cash.” South Korea’s internet giant Kakao has also integrated crypto payments for 12,000 merchants on its platform. Collectively, the integration of cryptocurrencies into the mainstream economy could help mop up additional revenue for the government in the form of taxes (VAT) or transaction tax.
The recent set of announcements come after a retreat from strident rhetoric by government officials at the beginning of this year. For example, a government official threatened to ban initial coin offerings but legislation pertaining to the ban was not passed. In February, Choe Heung-Sik, governor of the country’s Financial Supervisory Service, said that it would accept “normal transactions” using cryptocurrencies. While the legal status of cryptocurrencies in South Korea is still unclear, regulators in the country have mostly focused their efforts on preventing its use in criminal activities. Their regulations make it mandatory for exchanges to comply with anti-money laundering laws.
Will It Make a Difference?
In the last year, cryptocurrency trading has exploded in South Korea. At one point, the country accounted for a major chunk of trading in three of the top five most-valuable cryptocurrencies. An example of its heft in crypto markets was demonstrated this past January when prices for Ripple’s XRP crashed after coinmarketcap.com, a website that provides an average of aggregate crypto prices from multiple exchanges, excluded South Korean exchanges from its calculations. These developments have led some to conclude that South Korea might become the first cryptocurrency-powered nation on earth. (For more, see also: Bitcoin Price Crashes on Fear of South Korea Ban.)
But speculative trading in cryptocurrencies is different from using them for daily transactions. South Korea’s move to promote mainstream adoption of cryptocurrencies is similar to that of its neighbor Japan, which has legalized cryptocurrencies. But cash is still king and cryptocurrencies do not seem to have made a significant dent in transaction volumes in Japan.
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns 0.01 bitcoin.