South Korea’s prime minister is reportedly raising alarms about cryptocurrency’s influence on young people as regulators draw up rules for the country’s exchanges.
“There are cases in which young Koreans including students are jumping in to make quick money and virtual currencies are used in illegal activities like drug dealing or multi-level marketing for frauds,” Prime Minister Lee Nak-yeon said in a statement translated from Korean by CNBC.
“This can lead to serious distortion or social pathological phenomena, if left unaddressed.”
Accordingly, the South Korean leader called on government agencies such as the Ministry of Justice to look into the matter, CNBC reported.
Separately, the Financial Services Commission (FSC) is putting the finishing touches on proposed regulations for South Korea’s exchanges, the Hankyoreh newspaper reported.
“Cryptocurrency exchanges will be required to maintain standards for consumer protection, such as having separate deposits for customers’ assets, and for increasing transparency, such as having a procedure for confirming customers’ identity,” the publication quoted an unnamed official as saying. “The authorities will also be empowered to prosecute exchanges that break these rules.”
These shots across the bow come as South Korea has emerged as a hub of trading activity in bitcoin and other crypto assets. The country is home to two of the top 10 bitcoin exchanges by volume, according to CoinMarketCap.
South Korean exchanges were the first places where the bitcoin price reached $10,000 in this week’s run-up. During the third quarter, the South Korean Won passed the U.S. dollar as ether’s top trade pair, according to CoinDesk’s latest quarterly State of Blockchain Report.
But South Korean regulators have already taken stern measures in the crypto asset market. In September, the FSC banned domestic initial coin offerings and declared violators would be dealt with in a Virtual Currency Detention Center.
Photo of Prime Minister Lee Nak-yeon via Shutterstock.