South Korea’s new crypto regulations could shut down exchanges
Bitcoin's price has been hit hard after South Korea says it is cracking down on crypto regulations.
The South Korean government announced this morning that it wants to crack down on speculation in cryptocurrency trading in the country.
As a result, it has said that locally based exchanges are banned from issuing new trading accounts. If an exchange continues to issue accounts, the government says it will shut down offending exchanges. It also said it would monitor local banks and limit the funds that flow into cryptocurrency exchanges if it needs to.
These new rules will take effect in January, with South Korea also introducing a new rule where traders must now use their real name, banning anonymous trading.
Currently, many South Korean exchanges allow people to trade with just an email and name, with no real verifying of a buyer's identity.
The South Korean government says it is worried about the volatility of the market as well as the vulnerability exchanges have to being hacked and investment fraud. A recent study by online employment site Saramin found that over 30% of South Korea's workforce was trading in cryptocurrencies.
Earlier this month, South Korean exchange Youbit filed for bankruptcy after it lost $45 million in a hack as well as $92 million in another hack back in April.
As a result of the news, prices for bitcoin have since dropped 11%.
How will this affect bitcoin and other cryptocurrencies?
South Korea is often responsible for a little bit more than 10% of all trading in the crypto space, making it the third-largest market after the US and Japan.
Outside of bitcoin, both Ripple and Ethereum have seen huge growth in recent months due to high demand from South Korean traders.
If the South Korean government put a ban on exchanges, these other altcoins could also be affected.
However, if history is any indication, this pain may only be short term. When China cracked down on cryptocurrency in September, the price of bitcoin dropped by more than $2500. However, since then it continued to grow, hitting almost 1400 percent growth for the year so far.
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