Korea’s crackdown on cryptocurrency sparks backlashes

The South Korean government’s recently accelerated moves to put the brakes on the heated cryptocurrency market has been triggering fierce reactions from investors here, with some even calling for the dismissal of top financial policymakers.

Authorities here have been intensifying their warnings, the latest coming from the Justice Ministry, which said Thursday the government was mulling a bill to ban cryptocurrency trading.

On Wednesday, the National Tax Service conducted on-site investigations of exchanges Bithumb and Coinone, while the Ministry of Strategy and Finance also kicked off a task force to supervise the bubble-prone market.

Disgruntled investors have in particular flocked to the online petition bulletin board of Cheong Wa Dae, with thousands clicking in support.

One post, titled “No to virtual currency regulations -- Has the government ever allowed the people to dream?” showed more than 40,000 signees as of 2 p.m. Thursday, ranking No. 6 overall and top among economy-related petitions.

“It is the individuals themselves who should take responsibility for their investment, whether they succeed or fail. The accompanied risks exist in all sectors, be it virtual currency or stocks,” the petitioner wrote.

“People are no fools. They are investing in virtual currencies because they consider it to be part of the fourth industrial revolution and they invest within their capacities.”

The Blue House has been operating the bulletin board promising that petitions will be directly answered by senior officials and delivered to the president should the corresponding posts obtain 200,000 or more online signatures within 30 days. The cryptocurrency petition is to be effective until Jan. 27.

Other similar petitions regarding the cryptocurrency regulations can also be seen, with several demanding the dismissal of Financial Services Commission Chairman Choi Jong-ku, Financial Supervisory Service Gov. Choe Heung-sik and Justice Minister Park Sang-ki, claiming they lacked professional knowledge in blockchain technologies.

The escalating complaints, however, have achieve little in discouraging the government from pondering stronger actions.

“Due to the great concerns over virtual currencies, the ministry is working on a bill to fundamentally ban virtual currency transactions through operators,” Justice Minister Park said Thursday during his New Year’s conference with the press.

“The government has constantly been warning about the dangers (of virtual currency deals) but the message is not getting across.”

This week, the Financial Supervisory Service and Korea Financial Intelligence Unit also launched a rare investigation together into banks on whether they abided by obligations to detect money laundering and non-real-name transactions.

FSC chief Choi Jong-ku has remarked that virtual currency does not play the role of a medium of payment and that it only triggers side effects, such as money laundering, fraud, illegal fundraising, hacking attacks and irrational speculation.

By Bae Hyun-jung (tellme@heraldcorp.com)