IT Industry & Cryptocurrency Bans: South Korea

On Friday IT firms showed concerns that the government crackdown on cryptocurrency trading may adversely affect the blockchain sector, which is the basic technology for such transactions.

Digital Currency Market has become overly speculative recently and regulators are unable to keep pace with developments in areas such as security against hacking, money laundering and other potential abuses. As the justice ministry said, it could set bans on digital currencies and close domestic exchanges.

Firms engaged in blockchain-related businesses drew the line on possible effects from the government action, saying that virtual currencies like bitcoin are only one of the many services of blockchain, an open, distributed ledger system that is safe to use.

“We do not expect any serious repercussions on the projects that we are currently working on,” an official at the ICT firm SK Holdings C&C said.

Another official at LG pointed the negative aspects of the blockchain technology. He hoped that companies will be developing and applying innovative blockchain-based service.

But others say spinoff businesses may become inadvertent targets.

“We had expected a value-added services market from increased trade of cryptocurrencies,” an official from a local IT company said in response. “Now, that has become difficult due to government restrictions.”

A professor from Hanyang University said that small and medium-sized businesses will be discouraged from bans and there is a need that those restirctions be more clear.

Before digital currencies became subjects of rampant speculation, the government supported blockchain as a key technology of the fourth industrial revolution. IT companies have been making investments and enlarging related businesses from last year.

According to predictions in 2022 the blockchain market will reach to $10 billion.

Industry watchers say because of such prospects, the government will not be changing course on blockchain while taking steps to rein in cryptocurrencies. Finance Minister Kim Dong-yeon, while speaking about Thursday’s move against virtual money, stressed a “balanced view” of the situation because blockchain is broadly linked with a number of industries, including information security and logistics.

Due to the growing demand for information safety the security industry is seeing a grow.

“If information security guidelines are raised to the same level as those of the financial community, then the field for new kinds of business will get bigger,” an industry official said.

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