The soaring gains made by cryptocurrencies such as Bitcoin and Ethereum in recent times are based on speculation rather than investment, according to South Korean government officials.
In a meeting on Sunday, June 18, South Korean government agencies and financial regulators discussed the rising prices of cryptocurrencies. The local bitcoin industry remains unregulated, despite government authorities talking up the introduction of regulations this year from late 2016.
According to regional publication Business Korea, officials from financial authorities have pointed to market speculation driving up the value of cryptocurrencies, rather than investor-driven interest. Further, they also point to companies offering tokens via ICOs (initial coin offerings), which have proven to be enormously successful crowdfunding models powered by cryptocurrencies.
An unnamed official, as cited by the publication, stated:
The recent rise in cryptocurrency prices has taken on a speculation aspect. It is a clear speculation. In particular, it is different to evaluate the value of an initial coin offering (ICO) which issues a new coin, so it can make unreasonable profit.
Ethereum-based prediction market Gnosis is a notable example of a successful ICO, raising over $12 million in just under 10 minutes in a project valued at $300 million in April. Gnosis was topped by enterprise management platform solution Aragon, raising $25 million in under 15 minutes in May. In late May, Onegram launched a $500 million ICO for a gold-backed digital currency. The coin offering has, so far, raised just over $1.5 million.
Earlier this month, the IOTA’s IOT token had a record-breaking launch on Bitfinex and gained a total market value of $1.5 billion in its first trading day. At the time of publishing, the total market cap stands at just over $1.1 billion.
Sunday’s meeting between authorities comes at a time when South Korea gains a foothold among the world’s largest bitcoin trading markets, frequently scaling over 10% of the world’s traded bitcoin on a daily basis. The growing appetite for bitcoin comes at a 10% premium in the country, with bitcoin being traded at $250 more than USD-based markets.
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