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| A man watches a screen showing the prices of bitcoin and other digital currencies at a cryptocurrency exchange in Seoul, Friday, when the value of virtual coins plunged over fears of tightening regulations at home and abroad. Yonhap |
Bitcoin falls below W10 mil. on investors' panic selling
By Yoon Ja-young
Digital currencies plunged Friday as fears of tighter regulations in India and other countries spooked Korean investors, sending bitcoin's value to below the 10 million won ($9,267) mark here.
According to Bithumb, the country's largest crypto exchange, bitcoin extended its steep fall on investors' panic selling. It was trading below 9 million won for most of the session Friday, before making a modest rebound later in the day. This compares with its value of over 25 million won at the end of last year. Other digital tokens were no exception _ ethereum and Ripple's XRP also lost more than 20 percent of their values.
The plunge follows reports on tougher regulations overseas. Indian Finance Minister Arun Jaitley told lawmakers Thursday that his government does not consider cryptocurrencies as legal tender or currency. He said that the government will take "all measures to eliminate use of these cryptoassets in financing illegitimate activities, or as part of the payment system," though he didn't elaborate further on what form the regulations would be.
Additionally, the U.S. Commodities and Futures Trading Commission (CFTC) is investigating the cryptocurrency exchange Bitfinex over bitcoin price manipulation allegations. Bitfinex, one of the largest cryptocurrency exchanges in the world, is suspected of having used another cryptocurrency called Tether to inflate bitcoin prices.
"Concerns about tighter regulation are the biggest reason for the plunge in bitcoin and other digital coins. It appears the cryptocurrency market is just awash with bad news at the moment," said Park Nok-sun, an analyst at NH Investment and Securities.
He said the South Korean financial regulator's move to ban anonymous trading of digital tokens and the opening of new accounts for virtual currencies is having an effect of blocking inflows of fresh money into the cryptocurrency market.
"India and other nations are getting more serious about regulating the market. If you ask me whether the market will get better, I have nothing to say for now," he said.
Korean banks adopted the real-name system in virtual currency trading from Jan. 30, enabling cryptocurrency trades only for those who have their real-name accounts verified at major banks.
It is not only governments but also private companies that are regulating digital tokens. Facebook announced that the company would prohibit "ads that promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency."
On top of the toughening regulations, questions are being raised over the safety of digital coins.
Coincheck, which is the biggest cryptocurrency exchange in Japan, reported 58 billion yen (570 billion won) worth of New Economy Movement (NEM) coins were stolen by hackers, Jan. 26. According to the media, the Japanese authorities raided Coincheck, Friday. Japan acknowledged cryptocurrencies as a means of payment last year, and made exchanges register with the financial regulator. It aimed at lessening risks by putting it under the control of the regulator, but concern is growing over vulnerabilities.
Most cryptocurrency investors in Korea are young people in their 20s and 30s, and some of them are facing huge losses. A college student reportedly committed suicide after such losses.
In December, bitcoin reached a historic high of almost $20,000 before plummeting to its current value of roughly $9,800.
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