US and South Korea Collaborate on Cryptocurrency Regulation: Will New Regulations be Implemented by 2024?
South Korea’s cryptocurrency market suffered a major setback in 2022, experiencing a $40 billion decline due to problems within the Terra-Luna system created by Do Kwon. This incident highlighted the urgent need for clearer regulations in the crypto industry, leaving South Korean traders to deal with the consequences of widespread fraud.
In January, Lee Bok-hyun, the Chief of South Korea’s Financial Supervisory Service (FSS), is scheduled 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, reflects a proactive approach to deliberating on the dynamics of the cryptocurrency market and potential supervisory policies in the ever-evolving crypto sector.
The timing of this meeting is crucial, considering the upcoming changes in both the U.S. and South Korea. There are discussions about the SEC approving Bitcoin exchange-traded products in the near future. In South Korea, new regulations are expected to be implemented by July 2024, which will impact crypto traders and exchanges. These developments underscore the need for discussions at this level.
Data from KuCoin reveals that a significant 25% of South Korean adults aged 18 to 60 have invested in cryptocurrencies in the past six months. This positions South Korea as a major player in the global crypto market. Experts also predict that the global crypto market could reach a value of $5 trillion by 2024.
Do Kwon, the co-founder of Terraform Labs, is facing legal issues in different countries, including the possibility of extradition to the U.S. This situation exemplifies the challenges that arise when international laws intersect with cryptocurrencies.
Under the leadership of Gary Gensler, the SEC has taken a cautious approach to crypto. While many expected more aggressive regulation, the SEC has only approved crypto futures-related exchange-traded funds (ETFs) thus far. The upcoming meeting between Lee and Gensler may provide insights into future regulatory decisions.
Looking ahead to 2024, South Korea is optimistic about the implementation of new rules and the discussion surrounding ETFs. Many view this as a year of institutionalization for crypto, indicating growth and maturation for the industry. However, recent trends, such as the decline in trading volumes in 2023, suggest challenges lie ahead for South Korea’s crypto exchanges.
Despite the recent interest in crypto, 2023 witnessed a drop in trading activity. Upbit dominated the market with a 90% share by mid-year, leading competitors like Korbit to waive their fees, which had previously been a significant source of revenue, in order to remain competitive.