TECH
28/12/2017 13:08 GMT

Bitcoin Tumbles After South Korea Cracks Down On Cryptocurrency

Bitcoin's woes continue.

The price of Bitcoin took yet another tumble as investors were spooked by the revelation that South Korean authorities were launching a fresh crackdown on cryptocurrency trading.

Bitcoin fell nearly 8% on the day at 14,191 US dollars (£10,552) in Thursday morning trading, having recovered slightly from the day’s low of 13,672 US dollars (£10,168), according to prices listed on CoinDesk. As of writing it now sits at around 14,125.

Mike Blake / Reuters

Authorities in South Korea have reportedly put forward new legislation that would ban anonymous cryptocurrency accounts, stop banks from settling bitcoin exchange trades between parties that are unidentified, and give regulators the power to shut down cryptocurrency exchanges if necessary.

The measures have been floated as part of efforts to stamp out market speculation in a country that is believed to make up a significant portion of global cryptocurrency trading.

Bitcoin futures listed on the Chicago Mercantile Exchange (CME) were also trading lower, with futures expiring in January down 400 US dollars (£297) at 14,690 US dollars (£10,924), while those expiring in March were down 610 US dollars (£453) at 14,330 US dollars (£10,655).

South Korea earlier this month was considering a capital gains tax on cryptocurrency trading, and has so far banned the use of Initial Coin Offerings (ICOs) which allow investors to exchange cryptocurrencies like Bitcoin for proprietary “coins” or “tokens” linked to a specific firm or project.

Bitcoin’s price drop follows notable losses last week, when the cryptocurrency fell 36% from nearly 20,000 US dollars to around 12,137 US dollars in just five days.

It was prompted by news that one of South Korea’s cryptocurrency exchanges was going bust in the wake of a cyberattack, while Coinbase – another exchange in the US – said it was opening an investigation into sharp price increases.

Despite its continued price pains, Bitcoin is still up on the year, having started at around 900 US dollars in January.

The launch of bitcoin futures by both the CME and CBOE earlier this month following US regulatory approval has been hailed by proponents as helping to legitimise the use of the virtual currency.

It is a divisive issue among investors, with Goldman Sachs reportedly gearing up to enter the market just months after JP Morgan boss Jamie Dimon branded Bitcoin a “fraud”.

However, Christine Lagarde of the International Monetary Fund said “it may not be wise to dismiss virtual currencies”.

Britain’s own Treasury has announced plans for closer scrutiny of the cryptocurrency as part of EU-wide plans that will require online platforms that trade in Bitcoin to carry out due diligence on customers and report suspicious transactions.