After announcing that the country will tax cryptocurrency trading gains, the South Korean government recently reported that it wants to regulate the markets and trading activities. Government officials are concerned about the high risks that trading entails and are worried about the high volatility of the digital asset. The excessive speculation around bitcoin and substantial risks of losses are making executives and legislators wary. Regulators also expressed concerns about money laundering and other illegal activities by investors.
As a result, they discussed new rules that will help monitor cryptocurrency related activities in the country. In a statement released yesterday, the South Korean government declared it will make it illegal to open anonymous cryptocurrency accounts. Another regulation will be introduced allowing lawmakers to shut down cryptocurrency exchanges at any point, if necessary.
Cryptocurrencies, and mostly bitcoin, have been very popular in South Korea, mostly amongst students and young adults. However, South Korea is still reluctant in considering bitcoin as a valid currency for now. In the same statement, the government claims that “virtual coins cannot play a role as actual currency”.
A look at the charts is enough to understand the excitement around the digital currency in the country. Bitcoin is currently trading at close to $18,000, which is approximately 30% higher than the US market. The fact that it is so inflated compared to other exchanges in the world also worries the government, which is why it wishes to take action.
Last night, the price of bitcoin fell and went below $13,500, shortly after it had recovered from a crash that almost brought it back to $10,000 last Friday. The reason why the price fell is not completely known, although we can safely assume that the market reacted to the South Korean news. It is still trading under $14,000, as of 21:30 GMT.
Are investors selling their bitcoin as a result of new regulations? Will the price keep falling before going up in the near future? Time will tell, but the volatile market of cryptocurrency is always uncertain.
TLDR: The South Korean government released a statement announcing two new major regulations for cryptocurrency, one banning anonymous accounts, the other one making it possible to close cryptocurrency exchanges, if needed. As a result, we saw the price of bitcoin fall overnight.