Leaders of South Korea and the United States Prepare for Crucial Discussions on Cryptocurrency Regulation in 2024
South Korea’s cryptocurrency market suffered a massive blow in 2022 when fraud and collapse within Do Kwon’s Terra-Luna ecosystem resulted in a staggering $40 billion crash. This incident highlighted the urgent need for regulation in the largely unregulated crypto space, leaving South Korean traders devastated by the widespread fraud that occurred.
In January, Lee Bok-hyun, the Chief of South Korea’s Financial Supervisory Service (FSS), is set to have a crucial discussion with Gary Gensler, the Chair of the U.S. Securities and Exchange Commission (SEC). This anticipated meeting, reported by Chosunbiz on December 18, represents a proactive step towards deliberating on cryptocurrency market dynamics and potential supervisory policies in the ever-evolving crypto sector.
The timing of this upcoming meeting holds significant importance, particularly in light of ongoing regulatory developments in both countries. There are speculations about the SEC’s imminent approval of several spot Bitcoin exchange-traded products. Additionally, regulatory changes are expected in South Korea in July 2024, which will impact crypto investors and exchange practices. This regulatory evolution underscores the need for high-level discussions.
According to KuCoin data, approximately 25% of South Korean adults between the ages of 18 and 60 engaged in cryptocurrency investments within six months. This cements the country’s position as a major player in the crypto trading sphere. Furthermore, South Korean crypto market analysts predict that the global crypto market cap could reach $5 trillion in 2024, as they foresee continued global adoption in the crypto sphere.
The case involving Do Kwon, co-founder of Terraform Labs, adds to the complexity of the situation. He is currently entangled in legal challenges across multiple countries, including the possibility of extradition to the U.S. This intricate scenario underscores the intersection between international law and the decentralized nature of cryptocurrencies.
Under Gary Gensler’s leadership, the SEC has taken a cautious approach towards the crypto market. Despite expectations, the SEC has only approved ETFs linked to crypto futures, leaving decisions pending on spot crypto ETFs for major cryptocurrencies like Bitcoin and Ether. The upcoming discussion between Lee and Gensler has the potential to provide insights into future regulatory approaches in this domain.
South Korean analysts believe that 2024 will be a significant year for the crypto market. With the new regulations and the buzz surrounding ETFs, they foresee greater institutionalization in the crypto market, considering it a positive shift that will enable industry reorganization and refinement. The extended bear market and a sluggish 2023 have negatively impacted South Korea’s crypto exchange landscape, resulting in decreased transaction volumes and reduced exchange competitiveness.
Despite a recent surge in crypto activity, trading volumes in 2023 declined. The dominant exchange, Upbit, held over 90% of the market share in June, leading other exchanges like Korbit to eliminate commission fees indefinitely, which was their primary revenue source.
Tags: Crypto Regulations