A warning about ‘the fall of the moon’AHN HYO-SEONG
The author is a financial news team reporter of the JoongAng Ilbo.
The cryptocurrency Terra and its sister coin, Luna, created by a Korean developer, plummeted last week. As the market cap of the two coins (45 billion dollars) evaporated within a week, it deserves to be called the "fall of the moon." Many people suffered losses. As of May 15, 280,000 people own Luna through domestic exchanges alone.
Media reports and online communities are full of various stories regarding the collapse of Terra and Luna. Most of the stories boil down to failed investments by people in their 20s and 30s after being frustrated by the surge of housing prices, including an investor in his 20s who tried to make money for a lease deposit but now cannot even afford monthly rent. Politicians stepped in. At a meeting of the National Policy Committee of the National Assembly on May 17, one started with a statement that a protective measure for the investors should be prepared as soon as possible, and someone even argued that the person in charge should testify at the National Assembly.
There is a lack of investor protection in regards to cryptocurrencies. There is no basis to prevent shady listing processes and unclear disclosure, unfair trading using insider information or substandard coins. In the last five years, 541 cryptocurrencies have been delisted. There are many issues surrounding cryptocurrencies, so legislation is moving slow.
Kim Yong-beom, former deputy minister of strategy and finance, who served as the vice chairman of the Financial Services Commission in 2017 when the first cryptocurrency craze started, said in his book "Upheaval and Equilibrium," "The government also needs to move away from the position of minimum involvement and hasten legalization of overall virtual asset system."
However, among the 280,000 Luna holders who are called "victims," at least 100,000 of them bought the coin after the price started to fall, aiming at short-term profit. The financial authorities are internally concerned that the latest debate of investor protection would encourage short-term investment. Moreover, even if investor protection is enhanced in Korea, not all issues related to cryptocurrencies can be prevented as they are traded across borders.
Former Financial Services Commission Chairman Eun Seong-soo said on cryptocurrency investment in April 2021, "If you go the wrong way, you should be told clearly that it is the wrong way. I believe that protecting the asset that can go up by 20 percent overnight can encourage investment. The grown-ups must tell them." Upon retirement, Eun adhered to the conviction and said, "Someone had to talk about the overheating of the market." Just as Eun said, it is necessary to warn the people going into the "short trading hell" aiming for short-term profit. This a moment we need a clear warning for.