Gov't convenes emergency meeting on cryptocurrency speculation

Cheryl Sanders
December 13, 2017

Bitcoin-related shares slumped in early trade. The government is concerned that a cryptocurrency market bubble could cost people significant amount of money, so it said banks will have to thoroughly verify users' identities and make sure they conduct cryptocurrency transactions only with their own accounts.

Anchor: South Korea's government has met to take emergency steps to put the brakes on frenzied speculation as well as scams in the little understood blockchain and cryptocurrency sectors. they chose to prohibit financial institutions from holding or purchasing virtual currency as well as from making equity investments.

Prices on Bithumb, South Korea's biggest Bitcoin exchange, fell almost five percent after the announcement.

The announcement follows an emergency meeting by deputy ministers of financial regulators due to overheated security trading in virtual currency.

Earlier on Wednesday, Australia's central bank governor said the fascination with virtual currencies feels more like a "speculative mania".

But the measures fell short of speculation that authorities might ban Bitcoin trading in South Korea altogether, or tax profits from it.

As bitcoin notched more than 15-fold increase in value this year, Prime minister Lee Nak-yeon in November said he is anxious about students jumping into the frenzy, and called on the government to take action as "some serious pathological phenomenon" could arise if left unchecked. No decisions have yet been made, however, on regulating the market.

About one million South Koreans, many of them small-time investors, are estimated to own Bitcoins, and demand is so high that prices for the unit are around 20 percent higher than in the United States, its biggest market.

The Prime Minister's Office says Seoul will ban financial institutions from dealing in virtual currencies - including buying, possessing, or holding them as collateral. Bitcoin is trading at $16,850 on the Luxembourg-based Bitstamp exchange on Wednesday, near is lifetime high of $17,428 reached on Tuesday.

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