Asia Week: S Korean Crypto Chaos, Japanese Gamers’ Blockchain Bid
Catch up on essential blockchain and cryptocurrency news stories from East Asia this week.
Inside South Korea: A Country Divided by Crypto Fever
No issue has dominated the South Korean headlines this year – or divided the population – quite like cryptocurrencies. Indeed, Naver, the country’s answer to Google, has devoted a whole section of its news site to what it terms “Cryptocurrency Controversy,” with dozens of top-billing stories now breaking every day.
The government has sent out a series of mixed messages in recent months, beginning late last year when Prime Minister Lee Nak-yeon claimed that cryptocurrencies could lead Korea’s youth to get involved in criminal activities “such as drug trafficking or pyramid schemes.” The government, which this week also unveiled plans to tax cryptocurrency investors, was widely expected to issue a China-style crackdown. In fact, rumors have been flying in the media both at home and abroad that Korea’s cryptocurrency exchanges could be set for a total shutdown.
However, the government’s hardline stance has wavered in the wake of outcry from the country’s army of crypto enthusiasts. One of over 5,000 petitions calling for President Moon Jae-in to abandon his government’s crusade against cryptocurrencies has already gained well in excess of the 200,000 signatures needed to require an official response from the president’s office.
Crypto has sparked a fierce public debate in the country, with government officials and academics taking it in turn to demonize and/or celebrate its virtues. Former health minister Rhyu Si-min sparked fury from all corners when he appeared on TV network JTBC’s popular Newsroom show, announcing, “Cryptocurrency speculation is spreading like wildfire and should be eliminated.” He also commented, “Cryptocurrencies have no social function […] and zero value.”
This provoked an acid reply from KAIST, a public research university, professor Jung Jae-seung, who took to Facebook to decry, “Mr Rhyu seems to be unaware of how blockchain technology is being applied to the global economy, and how it is set to evolve. If he actually understood anything about blockchain technology, he would not be poking fun at cryptocurrencies.”
Other experts have urged the government “not to kill of the fourth industrial revolution” with potentially stifling regulations.
Park Sung-joon, director of the blockchain research center at Dongguk University, meanwhile, has urged patience, saying, “A more concrete methodology [for regulating cryptocurrencies] will evolve naturally as the blockchain continues to grow.”
Meanwhile, newspaper Munhwa Ilbo says that cryptocurrency controversy has even divided families, with many married couples seriously considering divorce as a result of clandestine cryptocurrency investments.
The paper reports the story of a wife who discovered her husband had secretly borrowed 37 million KRW from the bank and invested it in bitcoin without her knowledge. The wife said, "When I found out about it, I hired a delivery service to send my husband’s belongings straight to his office."
Law firms have confirmed that there has been a rise in divorce cases involving cryptocurrencies since mid-December last year, when the government announcement that it would begin implementing regulatory policies. A family lawyer commented, “Cryptocurrency investments could well, in some cases, constitute reasonable grounds for divorce.”
Young South Koreans Bemoan Cryptocurrency Fate
South Koreans in their twenties and thirties could be among those worst hit by the government’s proposed cryptocurrency clampdown. Per Korean exchanges Bitsum and Upbit, 70% of cryptocurrency investors in the country are aged 20-39.
Speaking in November last year, Park Sang-ki, South Korea’s justice minister, sent crypto markets around the world into a tailspin when he announced, “The government plans to close cryptocurrency exchanges and there is no disagreement between the ministries on this matter.”
Media outlets have been giving voice to frustrated young Koreans who have seen tighter regulations imposed on their trading – as well as the looming threat of the closure of the country’s cryptocurrency exchanges.
The ban has yet to materialize, but prices have tumbled as a result, with internet users dubbing price drops “a ceaseless storm of crap from above.” The “above” in this case pointedly refers to the government.
The Chosun Ilbo reports on the case of a young man named Bae who said he thought his cryptocurrency investments once totaling over USD 100,000 would help him clear a mountain of debt. Following the government’s announcements – and the subsequentmarket fallout – Bae says he has been left with assets worth little over USD 1,870.
Another frustrated young investor asked, “Why has real estate speculation never been subjected to regulations like these?”
Another complained, “We, the nation’s youth, are the only ones who will actually suffer from regulations. Government officials have actually profited from it,” referring to an incident whereby members of the civil service allegedly sold off large quantities of cryptocurrencies prior to official announcement of the crackdown.
The unemployment rate for young people aged 29 and below is currently at its highest since the turn of the millennium. And according to South Korea’s National Statistical Office, youth unemployment reached 9.9% last year, with some 102,800 young people out of work. Many out-of-work Koreans have claimed cryptocurrency investment provided them with a ray of hope – which has now been dashed.
President Moon Jae-in swept to power last year thanks in part to massive support among younger voters, with some 90% of young people casting their votes for him. One disgruntled Seoul National University student posted on a forum, “I used to consider voting for the [opposition] right wing parties unthinkable. But the sight of the cryptocurrency exchanges closing might well change all that.”
Japanese Gaming Giant Moves to Develop Blockchain Trading Platform
Gaming company Mobile Factory founder and CEO Miyajima Yuji has announced that his company is planning to move into the world of blockchain technology. Mobile Factory boasts popular title like Station Memories and Rekishi to Connect, and also provides a range of cell phone-related services, such as ringtones and mobile fortune-telling.
Speaking at the Japan Securities Analysts Association, Miyajima said, “Blockchain-related services are now a major challenge for the future.”
He added that Mobile Factory has already taken “its first step” toward blockchain services deployment, with plans for a blockchain-powered game now in the pipelines. The game is set to debut sometime this year.
Miyajima says the company hopes to introduce a blockchain-powered, decentralized trading platform for the game, along with a new, specially developed cryptocurrency that can be bought and sold on the platform.
The stock market responded favorably to Mobile Factory’s announcement, with share prices rising by 16.5% on the day the news broke.
Taiwan’s TSMC Still Riding High on Mining Hardware
Taiwanese hardware giant Taiwan Semiconductor Manufacturing Company (TSMC), which claims to be the world’s largest dedicated semiconductor foundry, has announced fourth-quarter growth of almost 6%, a 10.1% increase in revenue and a 10.4% increase in net income – thanks largely to the rising demand for cryptocurrency mining hardware.
Lora Ho, TSMC’s SVP and CFO, stated that “continuing demand for cryptocurrency mining [hardware]” was a major catalyst. She also predicted further mining-powered growth in the first part of this year, noting, “Moving into the first quarter of 2018, we expect the strong demand for cryptocurrency mining to continue.”