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Bitcoin Falls $1,000 as South Korean Government Moves to Regulate Crypto-Trading

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Bitcoin was back below $14,000 on Friday ($13,995) in the wake of new measures from the South Korean government to better regulate the cryptocurrency and warnings from the Indian finance ministry, who likened bitcoin to a “Ponzi scheme.”

On Thursday, bitcoin had tumbled more than $1,000 on a statement from the South Korean government in which it said it would ban anonymous cryptocurrency accounts and would create legislation allowing regulators to shut down coin exchanges if deemed necessary.

The government said it had “warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility.”

South Korea is currently gripped by a bitcoin frenzy and has been described by Fortune as “ground zero for a global surge in interest in bitcoin.” The country is the world’s fourth largest bitcoin market according to CryptoCompare.

Possibly the hottest topic in finance at present, bitcoin traded as high as $19,660 earlier in the month following the introduction of bitcoin futures on the CBOE exchange. The cryptocurrency has since lost nearly 30% of its value in a sign that investors are perhaps heeding the warnings from national regulators. Bitcoin began 2017 worth just $966.

The latest warning on bitcoin trading came on Friday from India in the form of a statement from the country’s finance ministry.

“There is a real risk of an investment bubble of the type seen in Ponzi schemes,” the ministry said.

The Indian ministry’s sentiments mirror those of the Reserve Bank of New Zealand, whose Acting Governor said on December 10th that bitcoin “appears to be a bit of a classic case [of a bubble].”

The UK’s Financial Conduct Authority has also issued a consumer warning about the risks of Initial Coin Offerings (ICOs), through which startups accept cryptocurrencies like bitcoin or ethereum in exchange for new, proprietary cryptocurrencies or crypto-tokens as a means to raise funds.

The FCA describe ICOs as “very high risk…investments” which are unregulated and offer no investor protection in cases of fraud.

Still, many amateur and professional investors are buying into the idea that bitcoin is only at the beginning of its move towards much, much higher prices. Cryptocurrency expert Julian Hosp told CNBC’s Squawk Box this week that 2018 could see bitcoin priced at $60,000.

 

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Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.
 

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