The following is an excerpt from a recent issue of bitcoin Magazine Pro, bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis directly to your inbox, Subscribe now.
As South Korea approaches its next legislative elections in 2024, both the current ruling party and the main opposition have pledged to implement several pro-bitcoin policies, most notably approving a bitcoin ETF.
On April 10, 2024, the Republic of Korea will hold its legislature. choice, which takes place every four years. Regardless of the outcome, the president will not change, as they serve five-year terms and are therefore elected through completely separate procedures, thanks to a quirk of South Korea's constitution. In fact, before these elections, the party that controls the majority of seats does not hold the highest office in the country and will not have the opportunity to contest it until 2027. However, one fact makes these distinctions less critical from the perspective from the Bitcoiner: Both sides have taken the unusual step of making similar promises to support bitcoin.
Although in theory there are 6 different parties competing for 300 seats in this election, 4 of them each have single-digit numbers. The two real contenders are the conservative People's Power Party (PPP), which currently holds the presidency, and the more liberal Democratic Party (DPK), which currently has 50 more seats. What's more, polls currently support a favorable result for the PDK, creating an unenviable possibility that People's Power could occupy the top position and have virtually no capacity to pass laws. It is likely that for these reasons the party decided to adopt radical new incentives, and that is where bitcoin comes into play.
Rumors of a pro-bitcoin turn for the PPP first materialized on February 19, 2024, when its representatives made comments to a local newspaper that a more comprehensive framework for cryptocurrency regulation needed to become a priority. Until this new framework is in place, they argued, it may be the most prudent option to eliminate all capital gains taxes on bitcoin or other cryptocurrencies until relevant legislation can be drafted and signed. However, legislation like this would be a tall order, and PPP spokespeople said it might be necessary to maintain such a fiscal pause for two years. This seems like a particularly clumsy attempt at vote fishing, especially considering that these taxes are crypto-gains-to-2025″>at the moment in a state of limbo, but it was not the only effort.
The PPP went to bitcoin-etf”>state That same day the party was considering a wide range of pro-bitcoin options, particularly loosening a number of restrictions on institutional investment. Not only did they commit to creating a “Digital Asset Promotion Committee” with special authority over digital asset regulation, but the PPP also made several vague statements about several specific policy reforms, most notably the crown jewel: an ETF. bitcoin spot. It was widely speculated that these vague promises were a cynical measure aimed at attracting the weakening support of the youth, especially considering that data from the National Tax Agency states that 80% of cryptocurrency users are between 20 and 39 years old. These moves may have been made with little real affinity for bitcoin, but the next event overturned the entire situation.
The next day, the opposition stole the spotlight from the PPP when the PDK made several bitcoin-etf”>promises, especially to allow individual investors to access bitcoin ETFs. Their plan specifically states that these purchases will have to be made through an individual savings account and therefore will not be able to be used by corporate interests for serious multi-billion dollar transactions. The DPK also made several vaguer allusions to removing other barriers to institutional legislation, but announced that a comprehensive proposal to “vitalize and institutionalize” the digital asset space will be published on Wednesday, February 21. These political upheavals led the PPP to crypto-related-poll-promises-ahead-of-elections/”>reply in kind by turning his general pro-bitcoin comments into definitive campaign promises.
This presents us with a most unusual situation: regardless of the true feelings of the political establishment about bitcoin or any other digital asset, the need to win the support of young people in a particularly contentious election has made either option the option. pro-bitcoin. But what are the chances of these politicians keeping their promise and what would the situation be like for South Korea? To answer these questions, it's important to look at some fundamentals of your overall economy. By all indications, it is doing quite well: although South Korea has recently experienced inflation, with its money supply at higher level since 1970 during the fourth quarter of last year, this figure has calmed significantly. In addition, its Consumer Price Index (CPI) has also relaxed in recent months, which shows that the cost of goods such as housing, food or electricity have been decreasing in turn.
An environment like this typically rules out one of the most prominent use cases for bitcoin adoption around the world, namely its use as a store of value. It seems unlikely that large numbers of South Koreans will seek to maintain significant savings in won, nor are they likely to use them for international remittances. However, South Korea has several distinct advantages as a potential new bitcoin hub. In 2022, a crypto-ownership-south-korea-2022/”>My dear 4% of South Koreans owned various digital assets, although this number was growing noticeably. Less than crypto-ownership-united-states-2022/”>14% of Americans had some in the same period. In other words, mass adoption hasn't been a major barrier to the US's status as a global bitcoin hub, with its wide range of active developers and revolutionary blockchain projects, and it likely won't pose a hurdle for South Korea either. . South Korea is a developed economy with a strong technology sector, and its stable inflation will be a necessary requirement for a certified digital asset industry to emerge.
Furthermore, there is a crucial point in South Korea's favor: as both major parties have noted, bitcoin enjoys enthusiastic enthusiasm. popularity among the nation's youth. Not only has the country, with its dense population centers, enjoyed a high level of Internet connectivity for decades, but Millennials have a vivid memory of a currency crisis in 1997, which led South Korea to turn to the IMF bailouts. These factors in particular have led a growing number of young Koreans to show interest in an alternative economic vision, and bitcoin has been there to provide that vision. The number of Bitcoiners may be small, but there are several reasons to believe that it could become fertile ground for future development.
In other words, it is quite possible that pro-bitcoin initiatives supported by both parties could trigger a real maturation of the young industry. Between the two sets of promises, at first glance it seems that the DPK's might prove more useful in this regard: its ETF proposal is not an invitation for the financial establishment to dominate the market, and its upcoming framework explicitly aims to empower a new domestic industry. However, the PPP proposal is also encouraging, and its plan to create a cryptocurrency regulatory body may also provide many opportunities.
No matter how you look at it, bitcoin has been taking the world by storm since the United States approved the spot ETF, and countries are falling like dominoes to enact similar pro-bitcoin legislation. South Korea's close neighbor, Japan, has even crypto-assets/”>considered taking steps to foster its own industry. Regardless of how the nation decides to oscillate between its two main policy options, it is clear that the decision on bitcoin has already been made. We can expect a new golden opportunity for South Korea, and the knowledge that bitcoin's strength can create similar opportunities elsewhere. After all, the way bitcoin has been growing, a success like this could go anywhere. No matter where you are, it may happen that you are asked to choose between bitcoin and bitcoin, and that makes it a safe bet.
