Bitcoin down as South Korea plans crypto-currency crackdown

Bitcoin fell 11.6% this morning after South Korea announced it would ban anonymous trading of virtual currencies and crack down on money-laundering activities using them, amid growing fears of a bubble over crypto-currencies.

South Korea is emerging as a key centre for crypto-currency trading, accounting for 20% of global bitcoin transactions, roughly ten times its share of the world economy.

The new rules announced by South Korea include a ban on opening anonymous crypto-currency accounts and new legislation to allow regulators to close virtual currency exchanges if necessary.

“Officials share the view that virtual currency trading is overheating irrationally … and we can no longer overlook this abnormal speculative situation,” the government said in a statement.

All anonymous accounts currently in use will be closed next month, it added.

The policy package also includes stepping up crackdowns on money laundering activities and financial fraud, including price manipulation, using digital currency trades.

“We will … resolutely respond to such crimes by slapping maximum sentences possible on offenders,” it said, vowing to “leave all policy options open, including closure of a crypto-currency exchange when deemed necessary”.

Bitcoin hit a record around $19,500 earlier this month, meaning it had increased more than 25-fold from its 2017 low in mid-January.

Its price fell 11.6% to $13,827 after this morning’s announcement.

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