The bitcoin price has stabilized at $14,500 after dipping below $13,500 yesterday. Analysts have attributed the recent dip in the price of bitcoin to now-refuted rumors that the South Korean government was planning to ban bitcoin exchanges.
On December 28, CCN.com reported that unconfirmed rumors around a potential cryptocurrency exchange ban by the South Korean government were false. But, FUD within the global cryptocurrency market led the price of bitcoin decrease along with other alternative cryptocurrencies in the market, with the exception of Ripple.
This week, the South Korean government released three regulatory frameworks it intends to impose in the upcoming months.
South Korean govt’s #Bitcoin regulations from this week:
1. Gov’t will impose regulations based on global trend.
2. Special cryptocurrency law drafted, *exchanges not compliant with policies* cannot operate.
3. Open towards bitcoin / blockchain tech development.
— Joseph Young (@iamjosephyoung) December 28, 2017
Local news publications in the South Korean market were reporting positively about the newly drafted regulations of the South Korean government, because for the first time, the government has solidified its plans to regulate and nurture the local cryptocurrency market, rather than dismissing it.
Analysts in the South Korean cryptocurrency industry noted that the government came to a consensus to regulate the space due to increasing speculation on the price of various cryptocurrencies and rising number of large-scale cryptocurrency ponzi schemes.
The government and local exchanges believe that strict regulation of the local cryptocurrency market would prevent funds being allocated into unregulated scams and ponzi schemes.
However, while the global average bitcoin price recorded a minor decline in value, it was an overreaction from the market given that the South Korean cryptocurrency market only accounts for less than five percent of international bitcoin trades. Hence, even in a hypothetical situation in which the South Korean government bans bitcoin, it will have minimal impact on the global bitcoin market.
The South Korean government is aware of this fact and as such, a spokesperson of a cryptocurrency task force formed by the South Korean Ministry of Strategy and Finance, Financial Services Commission, Ministry of Justice, Fair Trade Commission, and Financial Supervisory Commission stated that South Korea will follow the regulatory roadmap established by other major regions like the US and Japan.
“The South Korean government has no other choice but to follow the regulatory frameworks and trends established by other leading governments. While there certainly exists a negative reputation attached to the cryptocurrencies, the government’s stance is to allow what has to be allowed, for the benefit of the South Korean market,” said the Spokesperson.
Relative to other periods, bitcoin has had a rough month, even though it has recorded a 50 percent gain in December, primarily due to the rising popularity of alternative cryptocurrencies like Ripple and Ethereum.
Two short-term driving factors of bitcoin will likely be effective scaling of the Bitcoin network and adoption by the traditional finance sector as a robust store of value. Based on the current trend, it is likely that bitcoin will close the year at above $15,000.
But, in 2018, Nasdaq, Cboe, and NYSE amongst other financial institutions are expected to introduce various investment vehicles such as exchange-traded funds (ETFs) and futures, which will drive the price of bitcoin up in mid-term.
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Last modified: May 21, 2020 11:22 AM UTC