Bitcoin Drops 7% On New Regulations
Bitcoin fell by 7% Thursday, and most other cryptocurrencies are in the red as well after South Korea decided to issue new cryptocurrency regulations. South Korea has one of the hottest cryptocurrency markets, and fears that speculative interest could die down in the nation are pressuring bitcoin, Ethereum, and other cryptocurrencies.
Today's cryptocurrency prices
I mentioned that bitcoin is down by roughly 7% today, and most other cryptocurrencies are in the same boat. However, there's one exception -- Ripple, which has been the best-performing digital currency in recent days, is up by another 5%. Here's a look at the five largest cryptocurrencies by market capitalization, and how much each has changed over the past 24 hours.
New South Korean regulations weighing on most cryptocurrencies
The South Korean Financial Services Commission took new steps to cut down on speculative cryptocurrency trading on Thursday, which sent bitcoin down as much as 11% before slightly rebounding.
The highlights of the commission's action, which takes effect in January, are:
- The commission is prohibiting cryptocurrency exchanges from opening new trading accounts. If an exchange does open new accounts, the government can either stop trading or shut down the exchange.
- The commission is putting an end to anonymous cryptocurrency trading. People must now use their real names when trading digital currencies.
- The commission said that it would closely monitor banks, and may limit funds flowing into cryptocurrencies.
These new regulations come on the heels of another action earlier in December, which prohibited minors and non-residents from opening cryptocurrency trading accounts.
In a nutshell, the South Korean government is alarmed by the level of speculation taking place. In its statement, the government said, "The government can't leave the abnormal situation of speculation any longer."
South Korea is one of the most active markets for cryptocurrency trading, sometimes making up over 12% of all worldwide trading volume. On Thursday after the news broke, the nation's share fell to just 6%, so the new regulations are certainly having an effect. However, it remains to be seen whether it's a temporary dip in volume as speculators digest the information, or if it's a more permanent issue. In a recent article, I cited government regulation as one potential cause of a bitcoin crash, and while this particular instance hasn't triggered more than a small decline, it just goes to show what could potentially happen if other nations were to join in with similar crackdowns on cryptocurrency speculation.
Ripple continues to move against the grain
The sole bright spot among the five largest cryptocurrencies is Ripple, which has risen by more than 30% over the past week. In fact, the currency had rallied to as high as $1.43 before pulling back a bit.
I wrote on Wednesday that Ripple has been gaining some serious traction with financial firms, including the most recent report that the company is forming a "consortium" with Japanese credit card companies to utilize blockchain technology, which has been the catalyst for the most recent gains. For the time being, it appears that investors are still excited about the news, as the digital currency continues to climb.
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