The uncertainty about regulating the cryptocurrency trading in South Korea has been looming for quite a long time and it seems the government has now finally decided on a crackdown. As per the latest reports in the industry, the South Korean government is planning to bring new rules into practice in order to regulate digital currency trading in the country.
As per Reuters, in order to curb the widespread speculation growing amongst investors, the new regulations could include the prohibition of anonymous trading accounts operating within the country with authorities having the right to even shut down exchanges if needed.
Following this news, the Bitcoin price has plunged by more than 11% in the past 24 hours and is currently trading at $14375.70, according to CoinMarketCap. Before this correction, Bitcoin had managed to recover from a major correction last Friday when the cryptocurrency corrected to more than 40% going below $12000.
South Korea’s local news agency Yonhap has reported that the head of country’s financial regulation agency has said that the “bubble in bitcoin will burst later.” Moreover, with an unprecedented surge in the cryptocurrency trading, South Korea’s Prime Minister has expressed a strong worry over its impact on the Korean youth.
The craze and frenzy surrounding cryptocurrencies is so high that Bitcoin was trading at over 30% premium in the country when compared to the international rates. This highlights a huge local obsession relating to cryptocurrencies within the South Korean population.
The South Korean government, in a statement, said: “Cryptocurrency speculation has been irrationally overheated in Korea. “The government can’t leave the abnormal situation of speculation any longer.”
Stephen Innes, head of trading for Asia Pacific at Oanda said: “Regulators are getting so concerned that this is primarily and predominantly a retail phenomenon. 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.”
This major decision from the Korean government comes in just within two weeks after on the country’s local cryptocurrency exchange – Youbit – filed for bankruptcy. The Seoul-based exchange was a victim of hacking for the second time and had to consider shutting down its operations after losing 17% of its assets in a cyber-attack which was later blamed to be coming from North Korea.
After Japan, South Korea is the most dominant Asian country in cryptocurrency trading and accounts for more than a fifth of average global trading volumes. If the plan of a shutdown turns out to be true, this will surely come as a major setback to the global crypto markets as one more dominant player after China could be seen withdrawing its operations.
With such a huge appreciation in the cryptocurrency markets in a very short time, analysts and prominent economists have been constantly raising signs of alarm and asking investors to not burn their money by investing in cryptocurrencies. Many of them believe that there is a huge bubble in the market and this can burst at any point in time.