South Korea’s government said on Thursday it will impose additional measures to regulate speculation in cryptocurrency trading within the country.
“The government had warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility,” the government said in a statement, according to Reuters.
It noted that trading prices of most virtual currencies were much higher on South Korean exchanges than they were on exchanges in other countries, although it did not provide specific examples. The steps will include a ban on opening anonymous cryptocurrency accounts and new legislation to allow regulators to close virtual coin exchanges if needed, a measure recommended by the justice ministry, the statement said.
The move comes just over a week after one of the country’s cryptocurrency exchanges, Youbit, was forced into bankruptcy after losing 17 per cent of its assets in a cyber hack.
While there’s no indication Asia’s No. 4 economy will shutter exchanges that have accounted by some measures for more than a fifth of global trading, the news is a warning as regulators express concerns about private digital currencies.
“Cryptocurrency speculation has been irrationally overheated in Korea,” the government said in the statement, which comes little more than a week after the bankruptcy filing of one South Korean exchange. “The government can’t leave the abnormal situation of speculation any longer.”, according to Bloomberg.
Singapore’s monetary authority warned last week that digital currency buyers should be aware they could lose all their money, joining counterparts who’ve warned about speculative mania surrounding bitcoin, which has surged more than 1,300 percent this year even after today’s selloff.
“Regulators are getting so concerned that this is primarily and predominantly a retail phenomenon,” said Stephen Innes, head of trading for Asia Pacific at Oanda. “Regulators not only in Asia but globally are going to start addressing this fact because I don’t think they’ve actually come to terms with what the absolute downside of a complete drop in crypto means for the economy.”
Bitcoin fell as much as 11 percent to as low as $13,500 as of 2:02 p.m. in New York, erasing modest gains after the South Korean release, composite Bloomberg pricing shows. It’s now down 30 percent from the record $19,511 it reached on Dec. 18.
South Korea had previously announced its plan to tax capital gains from cryptocurrency trading to tackle what it sees as the risk of excessive speculation.
In South Korea, bitcoin has been extremely popular, drawing wide participation from housewives and students.
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