South Korea’s New Legislation Another Possible Catalyst to Halving Impact
The amendment of the Act on Reporting and Use of Specific Financial Information bill that will allow the buying, selling and trading of cryptocurrencies like Bitcoin in South Korea has added to the list of contributing factors that could determine a greater impact of the coming Bitcoin block reward halving in May on the crypto industry.
The parliament passed a legislation on Thursday May 5 that will provide a framework for the regulation and legalization of cryptocurrencies and crypto exchanges in the country.
It comes amidst South Korea’s worsening coronavirus situation which has been suggested to be . The Asian country is one of the many grappling with the rising tide of reported cases of infection though not the only one feeling much of the outbreak’s brunt. Many countries including China, Italy, Iran and the U.S. have been hurt by the ripple effect of the virus leading some market insiders to share that a continuous spread is going to worsen the global economy growth particularly the logistics and supply chain sector which has been badly affected already.
In this regard, Bitcoin supposedly ‘acted’ as a safe haven for a day as its price rose mildly on Thursday March 5 above $9000 while stocks plunged again on coronavirus fears. There have even been speculations that it could give some investors a reason to catch up with the fact that Bitcoin is an escape from a global financial downtrend.
But that has not been established fully yet. Last month, Bitcoin dropped in line with the S&P 500 which led to its suitability as a safe haven asset like gold to be questioned. Quantum Economics founder Mati Greenspan argued that the drop may show that Bitcoin is not a hedge against falling corporate profits but against “inflation, geopolitical strife, and central banks.” Whether Bitcoin is a hedge on the markets or a safe haven, none is clear though even as there are suggestions that things could tilt towards the up side.
As at this week, SFOX’s current crypto market outlook – spearheaded by Bitcoin market – remains neutral – same as a month ago – based on its multi-factor market index. However, the firm says the rating is within the confines of moving away “from the bearish direction of the index (-1) towards the bullish direction of the index (+1).”
Several major central banks around the world are expected to lower rates following the U.S. Federal Reserve’s 50 basis point cut earlier this week due to the weakened global economic outlook in the wake of the outbreak.
It is worth noting that South Korea has been flirting with Bitcoin for some time as one of its world’s biggest markets so the new legislation should not be seen as odd. In 2017, a survey of 941 people via email found that one-third of workers in the country have investments in cryptocurrencies like Bitcoin, Ethereum and others. Despite protests, the surge in interest saw the government introduce new regulations to curb the spread which had an impact on the industry as South Korea was the third largest crypto trading country at the time – behind Japan and the U.S.
Reports of South Korea’s new legislation comes as India lifts a ban on crypto-related activities in the country – though there are reports that the Supreme Court decision is likely to be contested by the government. India’s foray into the world of cryptocurrencies has enormous potential in the long term particularly as the impact of the pending block reward halving begins to reflect on the industry.
Founder of Cashaa, Kumar Gaurav, notes that the directive of the Reserve Bank of India for banks not to work with crypto exchanges which has been reversed this week caused a great damage to India “due to a lack of crypto awareness.”