The unprecedented rate at which Bitcoin has been appreciating is starting to pique the interest of regulators. The South Korean government is set to be the latest authority to make new moves to rein in the Bitcoin frenzy while other regulators are warming up to the idea.
It was only a matter of time before this happened. As predicted, governments will become concerned as the interest in Bitcoin rises and more money pours into the crypto market. Bitcoin has in the past 90 days risen by more than 400% as more and more people catch FOMO, the fear of missing out, and rush to put their money in the coin.
This is what is happening in South Korea. Cryptocurrencies are very popular in South Korea, as with other Asian countries.
The Bitcoin frenzy here is pretty huge. A number of people have left their desk job to trade cryptocurrencies 24/7; students are checking the price of Bitcoin in between classes; workers are trading it during lunch breaks and grandfathers and grandmothers are trading the difference at home. Twenty percent of daily Bitcoin trades over the world are in South Korea.
The government is concerned about this frenzy, its toll on its citizens and fears the mania is a prospective bubble. That's why it's taking action to regulate Bitcoin trading.
At an emergency meeting held by government officials on Wednesday, proposals were submitted on ways to curb or slow down the current mania surrounding Bitcoin. It's believed that some officials advocated for the outright ban of the currency but the overall gathering doesn't want to make hasty decisions.
New Bitcoin rules in South Korea
In a bid to rein in the Bitcoin mania, the government will force exchanges from allowing the registration of minors on their platforms. This means people younger than a certain age will be rejected by these exchanges. If exchanges don't require a proof of age for registration, they will start asking for it.
In addition to this, the government said it may tax capital gains from the trading of cryptocurrencies. The government is also expected to force exchanges to uphold investor protection rules and disclose all bid and offer quotes. This is to prevent money laundering and the use of Bitcoin for crime purposes.
The government also plans to ban new and upcoming cryptocurrencies as well as prohibit trading of Bitcoin futures. These rules are expected to be announced on Friday.
Bitcoin regulation. Good or bad?
The South Korean government isn't the first to take retrospective action on Bitcoin. China recently banned ICOs when they were becoming ubiquitous and closed down exchanges thereafter. There are also talks that Bitcoin regulation is coming to the United States, Japan, and the European Union. But is this a good thing for Bitcoin or not?
Many believe that Bitcoin regulation by governments is a good thing because it indicates that the crypto-coin is catching the attention of authorities and it may lead to its legitimization, clearing a path to make cryptocurrencies mainstream. However, there are others who believe a regulation will instead cause a clamp down on cryptocurrencies and usher in the beginning of the end.