Crypto Market on Edge as South Korea Enacts New Regulations
The blockchain community was on edge Thursday after South Korea announced a new mix of regulations aimed at taming the speculative surge in cryptocurrency accounts.
South Korea Steps Up Oversight Efforts
The South Korean government announced Thursday it would implement a series of measures to limit speculation in cryptocurrency trading. This includes swift bans on new trading accounts as well as anonymous trading accounts. Brokers that fail to comply with these conditions face the risk of getting shut down.
According to the South Korean Financial Services Commission (FSC), the new rules will come into effect in January. This was confirmed by the Commission’s English Facebook account. The social media post also confirmed that banks will play a more central role in regulating the market by serving as ‘gatekeepers’ in the flow of capital to and from crypto exchanges.
“The FSC will continue to make efforts to prevent side effects and risks from speculative trading of crytocurrencies from spilling over into the financial sector,” the Commission said in its post.
The government also issued the following statement, according to The Guardian:
“Officials share the view that virtual currency trading is overheating irrationally … and we can no longer overlook this abnormal speculative situation.”
Earlier this month, the government had restricted minors and non-residents from opening cryptocurrency accounts.
Until recently, South Korea had been one of the more laissez-faire jurisdictions for cryptocurrency trading, with major exchanges Bithumb and Coinone accounting for a growing share of market activity. It is estimated that roughly 20% of all bitcoin trades take place in South Korea.
Broad Market Selloff
South Korea’s new regulatory push triggered a brisk decline in the cryptocurrency market, with the total value of all coins in circulation falling by nearly $40 billion. The selloff hit bitcoin as well as the major altcoins, a sign that investors remain concerned over the regulatory landscape.
At the time of writing, the cryptocurrency market was worth $559 million, according to CoinMarketCap. The market cap reached a low of $539 billion shortly after 11:00 UTC.
Just a few weeks ago, the market nearly reached $650 billion following the launch of bitcoin futures trading on the major U.S. exchanges. The futures contracts have been credited with bringing cryptocurrency to mainstream circles, a feat that could lead to higher prices in the long term.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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