Insight into the Korean Crypto Ban on Foreigners

So yesterday I published a little #tweetstorm over on Twitter (@bread_krumbs) about why, seemingly all of a sudden, several exchanges have issued statements saying soon they will prohibit *all* foreigners from making fiat deposits into their exchange accounts.

It has been well received over on Twitter so I thought I'd re-post it here as well.

Check it out below, and feel free to follow me for more Korea-related musings.

0/ I'd bet money that Korbit will claw back their prohibition on fiat deposits from *all* foreigners that was announced over the weekend. The same goes for any other exchange that issued/plans to issue a similar ban.

I'll explain.

1/ According to Korbit, their announcement was issued in order to comply with government guidelines. No mention of which one though, since various pieces of the government have made several announcements over the past month or so.

2/ So I did a little homework. Luckily the government has a useful site (정부24) that lets you search official government announcements and reports.

I ran searches for: 가상통화, 가상화폐, 디지털 화폐, and 디지털머니 (both spaced and unspaced variants).

3/ The searches returned a little over 50 unique releases dating back to 14 July 2014.

Only about 8 releases or documents attached to releases contained the words 외국인(foreigner) and/or 비거주자(non-resident).

The first release to include those words dates to 13 December 2017.

4/ That report contained the first public guidelines to regulate crypto in Korea. On the foreigner issue it said:

"...measures should be taken to ban non-resident(foreigners) [비거주자(외국인)] from transacting [on Korean exchanges]..."

https://www.gov.kr/portal/ntnadmNews/1273333

5/ A summary of that meeting report was released the same day and contained identical phrasing: "...measures will be taken to prevent non-resident(foreigners) [비거주자(외국인)] from opening new accounts and trading..."

https://www.gov.kr/portal/ntnadmNews/1273342

6/ On 28 December 2017 three releases included mention of a ban related to foreigners:

1. [보도자료] 가상통화 관련 관게차관회의
2. [보도참고] 가상통화 관련 금융권 점검회의
3. 가상통화 거래 실명제 실시...거래소 폐쇄 특별법도 검토

Only 비거주자 are subject to the ban in 1 & 2 (외국인 was omitted even), but the third is less clear...

7/ Article 3 included the promise that new speculative demand (e.g. from foreigners(외국인) generally) would be blocked by introducing identity verification systems to exchanges.

This detail doesn't alter, but adds to Releases 1 & 2.

https://www.gov.kr/portal/ntnadmNews/1286463

8/ However, a shoddy article in the Segye Ilbo (2 January 2018) claimed the Korean gov hadn't defined foreigner(외국인) nor when restrictions should be carried out causing confusion amongst exchanges that led some to ban foreigner trading.

http://m.segye.com/view/20180102004847

9/ On 3 January 2018, in a release addressing numerous errors in the Segye Ilbo article, the gov stated:

"Once the scope of the restriction on foreigners is set it will be implemented since banks are already able to determine if a foreigner is residing in Korea or abroad."

https://www.gov.kr/portal/ntnadmNews/1292917

10/ WTF.

Between 12~28 December 2018 the government was clear that trading restrictions for foreigners will be limited to non-residents.

So Korbit's proposed prohibition on deposits from *all* foreigners seems to be due to the confused 3 January 2018 release.

11/ As this proposed prohibition seems to stem from a single release written by a confused and/or tired public official, I feel it'll only end up applying to non-resident foreigners.

But one can't discount Klownism - the funny way logic seems not to apply here sometimes...