South Korea is home to one of the world's biggest private bitcoin exchanges, with more than 2 million people estimated to own some of the best-known digital currency.

"I will focus on persuading the government not to excessively regulate in order to stave off adverse effects on cryptocurrency trading," Chin Dae-je, chairman of the Korean Blockchain Industry Association, said at an inaugural ceremony. "We will try to develop a sound ecosystem for the cryptocurrency industry."

Chin expressed concerns about the virtual currency buying spree in the country, adding that his association will establish an information system to let people know about what cryptocurrencies are.

The association -- which consists of 66 virtual currency exchange operators and blockchain-related firms -- will also look into the legitimacy of the theory that cryptocurrencies will eventually replace legal tender, he said.

The association will also come up with self-regulatory measures by the end of June to improve transparency in trading.

Jhun Ha-jin, head of the association's self-regulation committee, dismissed the move by the government to shut down virtual currency exchanges as a "result of the government's failure to properly understand the blockchain ecosystem."

"It is problematic for the government to meddle into the investment activities of individuals," Jhun said. "Twenty years after the start of the Internet era and the buying spree (of Internet firms), it now has become a major industry of South Korea. I am convinced blockchain will take less time to take a root as a future industry of South Korea." (Yonhap)