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Bitcoin blow-out continues as South Korea launches cryptocurrency ban

Thursday, January 11, 2018 5:33
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The price of Bitcoin slumped another 10% on Thursday, trading down to around US$13,275, marking a loss of about US$1,000 per unit in the past week.

A not-entirely-unexpected regulatory clampdown in South Korea, which is said to have been host to around a fifth of all Bitcoin transactions, was behind the sell-off.

Plans to ban digital currencies in South Korea

South Korea had already warned it would be seeking tighter control on cryptocurrencies, but, now it intends to outlaw the digital currency altogether.

“The world’s third largest crypto market plans to ban all trading in Bitcoin,” said Neil Wilson, senior market analyst at ETX Capital.

“We’ve seen South Korea get more nervous about the amount of speculation but this ‘nuclear option’ was a little surprising, particularly as there were reports this week that South Korea was seeking to work with Japan and China on crypto trading rules.

“It signals that authorities are struggling to get a grip on how to regulate cryptocurrencies and are very nervous about the degree of speculation – worth noting that prices in South Korea command a significant premium over other exchanges.”

Wilson added: “It is not just South Korea – the global cryptocurrency landscape is marked out by regulatory (as well as price) arbitrage.

China moves to end Bitcoin mining

“The move by South Korea comes as China quietly moves to end Bitcoin mining. Although relatively small in its impact on the market, it serves to highlight how authorities are tightening the noose.”

It presents the arguably the largest warning sign that the speculative ‘value bubble’ may be at risk of bursting.

The launch of Bitcoin futures onto derivative exchanges provided evidence of “some mainstreaming” for the cryptocurrency market, according to Wilson, though he sees more barriers separating the emerging market from the broader investment community.

No Bitcoin ETFs in US anytime soon

“The SEC has made it clear it will not roll over and allow Bitcoin ETFs any time soon,” Wilson said.

“Meanwhile, US Senate Bill 1241 would require anyone dealing in Bitcoin, whether issuing, redeeming or cashing it in, to be classed as a financial institution. Once you start hammering not just the Bitcoin exchanges with AML, KYC and all the other regulation, but also every investor and user, there is not a lot of point to it (if there ever was).

“And there is clearly a seigniorage problem for governments that they will not tolerate forever; governments do not just hand over the creation of new money to outsiders and the lack of regulation in cryptocurrencies, coupled with the high degree of speculation, threatens to do this.”

Story by ProactiveInvestors



Source: http://www.proactiveinvestors.com/companies/news/189876/bitcoin-blow-out-continues-as-south-korea-launches-cryptocurrency-ban-189876.html

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  • Mike

    Bitcoin investors beware. Why would government allow Bitcoin to exist if there wasn’t something in it for them?

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