South Korean Prime Minister Lee Nak-yon has recently called for the imposition of strict and rigid regulatory frameworks for cryptocurrency businesses, given the exponential growth of the global bitcoin market.
Lee emphasized that currently, cryptocurrency exchanges and investors have complete freedom, as the South Korean cryptocurrency exchange market is not regulated and does not have a national licensing program, like Japan.
According to Lee, as the South Korean bitcoin market continues to grow, the number of “kids” and “young investors” moving into the bitcoin market looking to make money quickly will inevitably increase, if rules are not put in place.
“If we let things continue, I feel some serious pathological phenomenon could occur,” Lee said.
Since January, the market valuation of bitcoin has risen from $10 billion to $167 billion. Other cryptocurrencies like Ethereum have recorded even larger gains than bitcoin this year, with the price of Ether increasing nearly 60-fold.
Lee is concerned that if teenagers and young investors attempt to invest in cryptocurrencies with the sole intent of generating short-term profits, it could negatively impact the cryptocurrency space. He further emphasized that bitcoin is “corrupting kids,” because of its rapid increase in value.
However, Lee’s logic is flawed, as the identical argument can be applied to any bull market or rapidly rising stock. For example, the market cap of Amazon, Tesla, SpaceX, Tencent, Nvidia, and Facebook have recorded large gains this year. If American “kids” or “young investors” invest in these companies, it would be difficult to argue that these companies are “corrupting kids” simply because of their strong performances.
For the authorities, it is important to acknowledge that bitcoin is one of the most liquid assets and stores of value in the world. Trading platforms or exchanges within the bitcoin market settle more trades than stock markets, and the daily trading volume of bitcoin is significantly higher than the most liquid stock on earth, Apple.
If young investors are pouring capital into an unregulated market and unrecognized commodity, the government could be concerned with the state of the particular market. But, bitcoin is a well-regulated and structured market that has started to attract multi-billion dollar institutional investors. In fact, Bithumb, the second largest cryptocurrency exchange globally, has a higher daily trading volume than KOSDAQ, South Korea’s leading stock market.
As Coinbase CEO Brian Armstrong stated:
“Over 100 hedge funds have been created in the past year exclusively to trade digital currency. An even greater number of traditional institutional investors are starting to look at trading digital assets (including family offices, sovereign wealth funds, traditional hedge funds, and more). By some estimates there is $10B of institutional money waiting on the sidelines to invest in digital currency today.”
Bitcoin is a store of value and investing in bitcoin is like creating a savings account on centralized banking systems; except that with bitcoin, investors are allocating capital into a decentralized and censorship-resistance currency. Hence, increasing investments in bitcoin from young investors is not a troubling trend but rather an optimistic development, as it demonstrates that millennials are starting to become more financially aware and independent.
https://coinjournal.net/south-korean-ministers-bitcoin-corrupting-kids-logic-flawed/
