Bitcoin Price Drops After South Korea Declares Martial Law
Bitcoin Price– South Korea’s recent declaration of martial law has dramatically slowed the country’s plans to regulate and reform its cryptocurrency sector. Key regulatory changes, including the legalization of securities token offerings (STOs) and the introduction of real-name corporate crypto accounts, have been delayed indefinitely, leaving the industry in a state of uncertainty.
Delayed Crypto Reforms: Key Measures Put on Hold
Important reforms that were meant to modernize South Korea’s crypto industry, such as legalizing STOs and implementing real-name corporate accounts, have now been sidelined due to the country’s ongoing political crisis. STOs are a mechanism for companies to raise funds by issuing digital tokens that represent ownership of real-world assets, such as stocks, bonds, or real estate. Meanwhile, the introduction of real-name accounts for corporate crypto users was aimed at improving transparency and reducing the risks of fraud and money laundering.
These reforms were considered crucial steps for South Korea’s crypto industry to catch up with global standards and reduce regulatory uncertainty. However, with the country’s National Assembly shifting its focus to impeachment proceedings and next year’s budget, all crypto-related legislative efforts have been put on hold.
South Korea’s Political Crisis and the Impact on Crypto
On December 3, President Yoon Suk Yeol declared martial law, which has led to a political and economic crisis in the country. This is the first time martial law has been declared in South Korea since 1980. The decision forced the National Assembly to focus entirely on the political crisis, sidelining the crypto sector and other urgent legislative matters. As a result, any progress on crypto regulations, including the potential legalization of STOs and implementation of real-name accounts, is delayed indefinitely.
A source close to the National Assembly, quoted in Chosun Ilbo, stated, The martial law crisis has taken all of the National Assembly’s attention. So it is hard to justify dealing with virtual assets now, even though there are many outstanding bills that need work.
Crypto Taxation and STO Legalization Postponed
In addition to regulatory setbacks, South Korea’s National Assembly has delayed crypto taxation until 2027. Originally scheduled for a vote on December 4, the delay in implementing crypto taxes nearly caused the tax to take effect in January 2024. The tax would have levied a 22% tax on annual crypto gains exceeding 2.5 million won (approximately $1,750). Despite broad bipartisan support for measures such as STO legalization and corporate crypto accounts, progress has stalled, with financial regulators refocusing their attention on stabilizing traditional financial markets.
Bitcoin Prices Tumble Amid Political Turmoil
The declaration of martial law sent shockwaves through the South Korean crypto market, leading to a sharp decline in Bitcoin’s price on December 3. Within just 30 minutes of the announcement, Bitcoin (BTC) prices on Upbit, South Korea’s largest crypto exchange, dropped by 33%, plummeting from ₩88,266,000 ($61,600) to ₩127,000,000 ($88,600). The sudden crash reflected the uncertainty surrounding the country’s political situation and its potential impact on the broader crypto market.
As South Korea’s political crisis continues to unfold, it remains unclear how long the crypto sector will face regulatory uncertainty. Industry experts suggest that the country’s crypto reforms, including STO legalization and the implementation of real-name accounts, will likely be postponed for at least until the political situation stabilizes.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
Leave a comment