2 - 4 minute read
As the United States and South Korea vie for the extradition of Terraform Labs co-founder and CEO Do Kwon, the Korean crypto community is invested in the outcome. The collapse of the Terra Luna stablecoin project caused some $60 billion to evaporate, and Korea was hit the hardest with 200,000 local victims. The continued focus on the Terra Luna incident in local media has led to a less-friendly crypto regulation environment and a decrease in the domestic virtual asset market capitalization. While South Korea is one of the most powerful crypto markets in the world, with the Korean won being the second-most traded national currency for Bitcoin, the regulatory focus is on investor protection and AML/CFT.
Currently, the focus of local crypto regulation is to prevent money laundering and terrorism. Korean crypto exchanges have to report to the Financial Intelligence Unit (FIU) and are obliged to KYC with new clients as well as report suspicious transactions. While the Digital Asset Basic Act (DABA), comprising 17 draft bills that largely focus on investor protection, was under development, none of the bills were passed. The arrest of Do Kwon has added urgency to the long-delayed process, and some crypto-related bills may be voted on soon.
The Terra Luna crash has had a psychological impact on the Korean crypto community, and traditional Korean companies have become wary of being associated with crypto. However, the retail market is still showing its power, and Korea played a role in the recent surge of the XRP token. Some previous members of the Terra community found other chains, and Korean builders and traders are looking to the future. While it may be some time before we see crypto-friendly regulation, Korea is focused on innovation and potential opportunities in the gaming and entertainment industries.
The Bottom Line
The continued focus on the Terra Luna incident and the extradition of Do Kwon, along with recent crypto-related events in Korea, have led to a less-friendly crypto regulation environment. Traders should be cautious when investing in local crypto developments and follow regulatory updates closely. Opportunities may arise in the gaming and entertainment industries as key parts of the Korean market look towards the future.