[Desk Column] Cryptocurrency Hot Potato

61% of Domestic Cryptocurrency Investors Are 2030 MZ Generation
Despite Warnings from Global Central Banks Including Korea About the Most Risky Speculative Market, 'Moth-like Investment'
Government Must Lead Cryptocurrency Market Regulation Before Collective Bankruptcy Crisis Occurs

[Image source=Yonhap News]

[Asia Economy Reporter Lee Cho-hee] The MZ generation (Millennials + Generation Z), who prioritize their own interests and happiness over organizations, dream of success based on individualism. This tendency likely explains why more than 60% of cryptocurrency investors at the center of controversy belong to the MZ generation.

However, the expectations of those who viewed cryptocurrency as a ladder for social mobility have been shattered. The cryptocurrency frenzy has turned into anger over unfair starting lines determining the future decades later, intensifying the storm.

Contrary to the hopes of investors worldwide, including those in Korea, global institutional finance seems to have reached some consensus on classifying cryptocurrency as a hazardous material. Although it is not considered a financial asset subject to investor protection, the absurd idea of imposing taxes has emerged because cryptocurrency is viewed from a regulatory-first perspective.

Before debating whether cryptocurrency is a speculative tool or a financial asset, the regrettable point is why the controversy raised years ago has remained stagnant within institutional finance without any progress.

In 2018, the world was feverish over Bitcoin. Large sums of money flocked like swarms to Bitcoin, an unfamiliar entity with no physical form and an unknown operating system, yet named 'currency.' Our government, caught off guard, responded with the most familiar tool: legal measures. At the time, Minister of Justice Park Sang-ki likened Bitcoin and other cryptocurrencies to speculative gambling and vowed strict action.

Cryptocurrency differs from money issued by central banks of each country. There is no central authority, and it is uncontrolled. This is why major national financial authorities view cryptocurrency unfavorably. Cryptocurrency has an independent structure that no specific country can own.

Korea is reportedly set to impose taxes on cryptocurrency. Taxes will be levied on financial income. Does this mean the authorities officially recognize cryptocurrency as a financial asset that can be used, invested in, and traded?

From the heated exchanges between Financial Services Commission Chairman Eun Sung-soo and members of the National Assembly’s Political Affairs Committee last April, it is clear that social consensus on cryptocurrency in Korea is still far from reached.

The group suffering the most in this process is the MZ generation mentioned at the beginning. The 2030 generation has come to regard cryptocurrency as the only realistic elevator for social advancement. However, the government effectively neglected the market until the number of trading accounts exceeded 9 million. Then, instead of protecting investors, it tried to kick away their ladder by imposing taxes, only to face a backlash.

It is not wrong to say that since they invested in virtual assets that no one recognizes, the losses are the investors’ responsibility. However, the government’s negligence is greater, having merely watched from the sidelines as the market grew irreversibly without any legal protection or regulations. Cryptocurrency investment could trigger a mass bankruptcy crisis among the 2030 generation, who are the backbone of society.

In September, under the 'Act on Reporting and Using Specified Financial Transaction Information' (Special Financial Transactions Act), most unqualified cryptocurrency exchanges are expected to disappear. The fuse of this bomb is gradually shortening, but the government is just passing it around like a hot potato. It must promptly move to institutionalize the cryptocurrency market before it reaches an uncontrollable stage.

This content was produced with the assistance of AI translation services.