South Korea Enacts New Regulations on Cryptocurrency

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Today, the government of South Korea announced new cryptocurrency regulations which led to a 12 percent and an 8 percent drop in the prices of bitcoin and Ethereum, respectively. After the United States and Japan, South Korea is the third-largest market for cryptocurrencies in the world. Starting next month, anonymous cryptocurrency accounts will not be allowed anymore under the new legislation and regulators will continuously monitor cryptocurrency exchanges going forward. The government said in a statement: “Cryptocurrency speculation has been irrationally overheated in Korea. The government can’t let this abnormal situation of speculation go on any longer.”

The Wall Street Journal reported that the Justice of Ministry of the country might even suggest legislation that would close down exchanges nationwide. However, details regarding how or when that would happen were not provided. This is the most recent step by South Korea in order to reign in the frenzy regarding cryptocurrencies. In September, it prohibited initial coin offerings.

While interest in cryptocurrencies such as bitcoin have surged in 2017, there is a hefty amount of volatility in the crypto market, which is a risk that the government of South Korea is attempting to cull with regulation. This month, the price of bitcoin hit an all-time high that neared the $20,000 mark after beginning the year around $1,000. And along with huge price fluctuations, some cryptocurrency exchanges have also been struck with major hacks — Youbit, a South Korean exchange, filed for bankruptcy after losing $35 million to a hack earlier this December and $72 million in another hack that took place in April.

In the South Korean government’s statement today, it warned that cryptocurrencies could be “vulnerable to the damage from investment fraud or hacking attacks on exchanges” and Lee Nak-yeon, its Prime Minister, said that they could “lead to some serious distorted or pathological phenomenon.”

Read more: Price of Bitcoin Plunges After Crackdown of South Korea on Cryptocurrency