Cryptocurrency ban could destroy economies for decades: Tapscott

Best-selling author and blockchain advocate Don Tapscott on Wednesday called for South Korea’s “sensible regulation” on cryptocurrency tokens and initial coin offerings, warning the government could otherwise “destroy economies for decades,” during a press conference in Seoul.

Tapscott called bans on cryptocurrencies and initial coin offerings “heavy-handed approaches used by dictators and undemocratic countries,” and contrasted them with “sensible regulation.” The 70-year-old Canadian was one of the speakers at a forum titled “Blockchain Revolution: Convergence with Traditional Economy” held in Seoul Dragon City.

“Governments can crush this and destroy their economies for decades,” he said. “It’s not clear which way (South Korea) will go, but there is an optimal and correct direction.”

State regulations on a certain technology out of fears of disruption are not new, and such moves end up inhibiting the growth of domestic industries, he added.

For example, state-led blockchain regulations may have elements of the Locomotive Acts in the United Kingdom, also known as “red flag laws,” according to Tapscott.

The law passed in the late 19th century required drivers of automobiles to have an assistant waving flags in front of their cars in order to protect horses. He said such an approach impeded the growth of the auto industry in the UK, in contrast to the United States.

“Every country is faced with (a) red flag moment,” he said. “What will you do? Will you embrace the automobile like the US did, or will you pass the red flag law?”

Confusion persists in South Korea as to whether it should impose an all-out ban on cryptocurrency trade by a state-sponsored law. Furthermore, new measures slated for announcement this month are expected to follow up on its ban on initial coin offerings, non-real-name transactions of coins and coin trade by minors and foreigners.

Earlier in January, authorities also raided cryptocurrency exchanges in Korea on allegations of illegal margin transactions by users or tax evasion. In addition, Financial watchdogs probed commercial banks this month on whether they abided by obligations to detect money laundering and non-real-name transactions when offering virtual accounts for the exchanges.

To curb criminal activities involving cryptocurrencies, however, there is no need for a new separate law, Tapscott said.

“The criminals are always the first to use any new technologies,” he said. “And we already have laws against fraud -- we don’t need new laws.”

Tapscott suggested the Korean government benchmark the US’ Securities and Exchange Commission, which came up with “framework that differentiates between securities tokens and other tokens.”

Tapscott, the author of “Blockchain Revolution,” has depicted blockchain technology as an “internet of value” that will replace the “internet of information” in the current era.

Swiss blockchain technology startup Jibrel Network hosted the event. Speakers of the event included Binance Chief Executive Changpeog Zhao, cryptocurrency Neo co-founder Da Hongfei, among a dozen others.

By Son Ji-hyoung 
(consnow@heraldcorp.com)