Bitcoin prices on downward spiral in Korea


"I think regulators have done what they're supposed to do", Cedric Jeanson, a former JPMorgan trader and founder of the bitcoin-focused hedge fund BitSpread, said of Korea's latest measures in an interview on December 28. After forming a high of $16416 this week, the cryptocurrency came under a selling pressure as traders showed their reaction to South Korea's news. Hong said that under the new measure, only real-name bank accounts and matching accounts at cryptocurrency exchanges can be used for deposits and withdrawals, while the issuance of new virtual accounts to cryptocurrency exchanges will be banned.

The government's ban on using anonymous accounts, effectively a mandate that exchange providers perform know-your-customer (KYC) due diligence, is seen as the latest move to curb the trading activity around cryptocurrencies in the country.

Following this news, the Bitcoin price has plunged by more than 11% in the past 24 hours and is now trading at $14375.70, according to CoinMarketCap. The Long Island Iced Tea Corp - an iced tea company that changed its name to Long Blockchain and saw its stock price rise over 200 per cent - saw its price dip by about six per cent after the news from South Korea that had nothing to do with iced tea.

Korea's fresh regulations also dealt a blow to Bitcoin's global rates, with the U.S. price dipping below US$14,000. Reuters reported that Bitcoin is so popular in Korea that it attracted non-professional investors like housewives and students to bet their savings in it.

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Despite the extended fall, the Korean price was still nearly 30 percent higher than global prices, which local traders call "Kimchi Premium" mocking the speculative fever of the market that makes up more than a fifth of global trading.

Korea's tightening measure on cryptocurrency follows the suit of China, Japan and Australia. It said officials from the Justice Ministry could propose legislation that would shut down cryptocurrency exchanges nationwide, but didn't elaborate on when this might happen.

According to the market tracker Coinhills, the Korean Won is the third-most traded currency for bitcoin, and it regularly gives the US Dollar competition in related altcoins like Ethereum.