All of South Korea’s presidential contenders have expressed support for cryptocurrency to win over young voters ahead of the country’s presidential election next month.
When it comes to voting in South Korea, real estate is the most important issue on voters’ minds right now, as young people under the age of 24 earn salaries of around KRW 2.6 million (US$2,176) a month while dealing with expensive Seoul rent and having no realistic prospect of purchasing an apartment. Many of them have shifted their focus to equities and cryptocurrencies.
There are more than 5 million individual cryptocurrency accounts across the country’s top three cryptocurrency exchanges, according to Edward Hong, head of the platform at crypto venture capital firm Hashed, according to Hong. Cryptocurrency investors, according to Hong, account for around 10 percent of this year’s votes.
South Koreans own smartphones in large numbers (about 91 percent). The percentage of people who use the internet is 96.5 percent. A large number of people participate in gaming, and the majority have some level of trading expertise.
Together, these factors result in a populace that is very responsive to crypto assets, and a significant number of Generation Z voters have emerged as a substantial electoral force in the nation.
Calculations on the political stage
To yet, candidates have presented nothing in the way of clear ideas for regulating cryptocurrency, in contrast to their extensive commitments to addressing the nation’s housing crisis. They have, on the other hand, made public remarks expressing their support for the sector.
As Steve Lee, an investor at BlockTower Capital, a hedge fund that specializes in crypto assets and blockchain technology, explained,
“They are incentivized” to make more crypto-friendly statements or refrain from saying anything negative because doing so could cost them votes from the younger generation if they say something negative.
According to reports, the present government suggested a 20 percent tax on cryptocurrency gains achieved in a one-year period that exceeded KRW 2.5 million (US$2,122) but was forced to backtrack after receiving widespread criticism from cryptocurrency investors.
While there have been proposals of blockchain-specific laws, which would need investor protection and disclosure standards, no legislation has been approved, and the lack of clarity is discouraging potential institutional investors from investing in the technology.
Although “progress has been made in 2021,” Lee said that “regulatory advice for crypto investing still needs clarification.”
A “calculated risk,” according to Jin Kang, head of legal at Hashed, is being taken to ensure that the ruling party’s plan for a regulatory framework would be attractive to potential voters.
At the moment, there are 14 cryptocurrency-related banknotes in circulation. In the aftermath of the presidential election, Harold Kim, a former director of the Korea Blockchain Association, stated, “Something has to happen.”
Bringing businesses back to life
Candidates have committed to re-establish cryptocurrency enterprises in the Republic of Korea. In 2017, the Financial Services Commission published a notice on its website that effectively banned initial coin offerings (ICOs), albeit the notification was never incorporated into legislation or regulation. As a result, there is currently a de facto prohibition on ICOs.
Following the publication of the notice, crypto-related businesses relocated to Singapore or other countries to conduct business without fear of regulatory repercussions.
Kang believes that simply rescinding the notice will not be sufficient to get businesses to relocate. He believes that only a “more comprehensive package” could persuade individuals to relocate their cryptocurrency firms back to South Korea.
This package may include tax breaks combined with educational or job-related incentives and rewards for hiring locals, among other things.
More extensive policy packages have only been published at the local government level thus far. The city of Busan, for example, has been declared as a blockchain special zone that is free of regulations, allowing projects to test new technologies and services in an unregulated environment.
Consumer protection is important.
In recent headlines in South Korea, the problem of insufficient safety for cryptocurrency investors has been brought to light.
The stock price of gaming startup WeMade skyrocketed when the business revealed that it will offer play-to-earn games.
According to Lee, “This not only demonstrates the extent of NFT (non-fungible tokens) enthusiasm among retail investors, but it also demonstrates how publicly traded firms or brand names promote hype.”
Last month, as word leaked that WeMade was selling off its WEMIX tokens in tranches, the firm’s token price plummeted as the company faced accusations that it was benefiting itself at the expense of small and medium-sized businesses (SMEs).
WeMade said in its white paper that 74 percent of its tokens will be utilized to fund the expansion of its ecosystem, which was confirmed by the company. It has stated that it intends for the token to be used as in-game money in at least 100 titles, which is a significant number.
The lack of defined criteria for disclosure, as well as a guideline for how transparent a firm should be about its ownership, is a problem at the moment. Chang Hyun-Duk, the CEO of WeMade, has committed to making transactions more transparent and reimbursing investors who have suffered losses.
Many of South Korea’s top entertainment and gaming corporations have expressed an interest in the cryptocurrency industry, stating during annual and shareholder meetings that they want to explore non-fungible tokens (NFTs) or play-to-earn games.
Some industry analysts, on the other hand, have suggested that WeMade should not be held responsible and instead point to a regulatory vacuum.
Because of new regulations, exchanges in South Korea have been consolidated, and consumers may now only use a government-issued currency at four of the country’s exchanges. Upbit, which has a collaboration with app-based lender K bank, is the largest cryptocurrency exchange in South Korea, accounting for over 80% of the country’s total market capitalization.
Nonetheless, there are still questions regarding the listing requirements.
“I don’t believe there are many tokens that could match the norms of the stock market,” Kim stated. “We’d want to see a set of regulations,” said the group.
Some of the new legislation mandates that token issuers communicate with exchanges. If an exchange wants to trade ether, for example, it would have to get clearance from Ethereum co-founder Vitalik Buterin and his team first. Some standards, similar to those that apply to stocks, also demand that a financial history be supplied for tokens.
Uncertainty exists as well about the travel regulation, including how prices will be registered, information will be checked, and infrastructure will be put in place.
Furthermore, several exchanges are struggling as a result of restrictions in transferring cash overseas, resulting in them just having a presence in South Korea.
The candidates and their positions are listed below.
Yoon Seok-youl (Yoon Seok-youl)
The People Power Party candidate Yoon Seok-you made an appearance at the 2022 Virtual Assets Conference earlier this month when he spoke about the need to alter too burdensome regulatory frameworks. A change to negative regulation of the virtual asset market, as promised by Yoon, will take effect immediately.
As a result, Yoon believes that infrastructure should be in place before a cryptocurrency tax is introduced. He said last month that the no-tax level for cryptocurrency profits will be the same as the barrier for stock gains (KRW 50,000 million, or US$42,450).
He has stated that he will enable initial exchange offerings and that he intends to establish a digital industry promotion organization. He stated that the government will have the ability to seize earnings gained through market manipulation.
Lee Jae-Myung is a South Korean actor.
Lee Jae-Myung, a Democratic Party candidate, has shown interest in the potential of bringing back initial coin offerings. He paid a visit to Upbit’s headquarters last month. Lee has made NFTs available for purchase and has stated that he will take cryptocurrency donations for his campaign.
He has established a special task force for gaming and the metaverse, and he has spoken of establishing the country as a crypto center, promising to build a national crypto asset and distribute it to the general population. He is urging that suitable protocols be put in place before the government implements a crypto tax on the general public.
Ahn Cheol-soo (Ahn Cheol-soo)
Following the controversies surrounding the top two candidates, Ahn Cheol-soo, a candidate for the People Power Party, has garnered support. He has vowed to transform South Korea into a “sci-tech” nation and has stated that he would like his party to run on blockchain technology to achieve this goal.
He has stated that listing rules for tokens should be more transparent and that investors should have greater access to information and research about the products they are purchasing.
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