South Korea’s government is pushing ahead with new rules to curtail the widespread speculation on cryptocurrencies that has swept the Asian nation this year, following an emergency meeting of officials and regulators Wednesday.
The proposed measures, released by the Office for Government Policy Coordination, range from levying capital-gain taxes on trading cryptocurrencies, to restricting financial firms from holding, acquiring and investing in them. No timeline has been set for when the measures would be implemented.
The new regulations come amid mounting concern within South Korea about the potential for people to become addicted to bitcoin trading. The country’s prime minister Lee Nak-yon recently warned that rising interest in cryptocurrencies could “lead to some serious distorted or pathological phenomenon.”
South Korea has become a hotbed for bitcoin trading in recent months. At one point last week, the country accounted for as much as a quarter of global bitcoin trading activity, exceeding that of the U.S., according to Coinhills, a data firm that tracks digital currencies. South Korea has a population of about 51 million, compared with 323 million in the U.S.
The meeting came after South Korea’s communications regulator said Tuesday that it would levy a 58.5 million South Korean won ($53,528) fine on BTC Korea.Com Co., the Seoul-based operator of Bithumb, South Korea’s largest cryptocurrency exchange, for compromising the personal information of some 36,000 users when it was hacked earlier this year.
In a statement, Bithumb said it accepted the regulator’s decision with a “heavy heart.” It added that the hack had affected a staff member’s personal computer and not the exchange’s internal system.
Millions of individual Asian investors have played a crucial role in fueling bitcoin’s rally from just shy of $1,000 at the beginning of the year to a high of more than $17,000 this week. In South Korea, bitcoin’s popularity has led to the cryptocurrency often trading at a higher price there than elsewhere: last week it hit almost $25,000 on Bithumb. Two other South Korean exchanges, Coinone and Korbit, also displayed prices well above $20,000.
Bitcoin’s price fell 3.7% on Bithumb shortly after the government’s announcement Wednesday.
Under the government’s newly proposed rules, exchanges with more than one million users and 10 billion won ($9.2 million) in revenue will be required to certify themselves beginning next year. High-school students and below, and foreigners who are not residents of Korea, will be prohibited from creating accounts to trade cryptocurrencies in local exchanges.
Representatives for Korea’s cryptocurrency industry largely welcomed the government’s announcement, having feared even tougher sanctions. “We were worried that the government would put out a blanket ban,” said Kim Jin-hwa, the former director of Korbit and the co-head of an industry group that includes 10 cryptocurrency exchanges, including South Korea’s three largest.
Mr. Kim said the industry group had already included similar recommendations in a proposal to the government that it plans to make public on Friday.
Bitcoin is a digital currency that runs on a decentralized network of computers, as opposed to traditional currencies that are under the control of central banks or governments. Users can exchange value directly, without a middleman such as a bank. The price of bitcoin recently traded at $16,800, according to research site CoinDesk.
Also on Wednesday, the head of Australia’s central bank described the craze to do with bitcoin and cryptocurrencies as a “speculative mania.”
“The value of bitcoin is very volatile, the number of payments that can currently be handled is very low, there are governance problems, the transaction cost involved in making a payment with bitcoin is very high and the estimates of the electricity used in the process of mining the coins are staggering,” said RBA
Gov. Philip Lowe.
Earlier this week, New Zealand central bank Acting
Gov. Grant Spencer
warned in a TV interview that bitcoin’s sharp rally “looks remarkably like a bubble forming to me.”
On Sunday, the first U.S. bitcoin futures started trading, sparking the latest move higher in the digital currency’s sharp rally.
via WSJ.com: Technology http://on.wsj.com/2jyWrmB
December 13, 2017 at 07:57AM