FILE PHOTO: A small toy figure is seen on representations of the Bitcoin virtual currency in this illustration picture, December 26, 2017. REUTERS/Dado Ruvic/Illustration
LONDON (Reuters) – Bitcoin tumbled 18 percent on Tuesday to a four-week trough close to $11,000, after reports that a ban on trading of cryptocurrencies in South Korea was still an option drove fears grew of a wider regulatory crackdown.
Bitcoin’s slide triggered a massive selloff across the broader cryptocurrency market, with biggest rival Ethereum down 23 percent on the day, according to trade website Coinmarketcap, and the next-biggest, Ripple, plunging 33 percent.
South Korean news website Yonhap reported that Finance Minister Kim Dong-yeon had told a local radio station that the government would be coming up with a set of measures to clamp down on the “irrational” cryptocurrency investment craze.
South Korea had said on Monday that its plans to ban virtual coin exchanges had not yet been finalised, as government agencies were still in talks to decide how to regulate the market.
Bitcoin slid on the latest news, trading as low as $11,191.59 on the Luxembourg-based Bitstamp exchange, down 18 percent on the day, for a short period putting the digital currency on track for its biggest one-day fall in three years.
“It’s mainly been regulatory issues which are haunting the cryptocurrency, with news around South Korea’s further crackdown on trading the driver today,” said Think Markets chief strategist Naeem Aslam, who holds what he described as “substantial” amounts of bitcoin, Ethereum and Ripple.
“But we maintain our stance. We do not think that the complete banning of cryptocurrencies is possible,” he said.
Cryptocurrencies enjoyed a bumper year in 2017 as mainstream investors entered the market and as an explosion in so-called initial coin offerings (ICOs) – digital token-based fundraising rounds – drove demand for bitcoin and Ethereum, the second-biggest digital unit.
The latest tumble leaves bitcoin down more than 40 percent from the record high around $20,000 it hit in mid-December, wiping about $130 billion off its “market cap” – the unit price multiplied by the total number of bitcoins that have been released into the market.
The news from South Korea came as it emerged a senior Chinese central banker had said authorities should ban centralised trading of virtual currencies as well as individuals and businesses that provide related services, according to an internal memo from a government meeting seen by Reuters.
Bloomberg reported on Monday that Chinese authorities plan to block domestic access to Chinese and offshore cryptocurrency platforms that allow centralised trading.
“(It) seems like it’s uncertainty spooking the markets,…with regulations unclear,” said Charles Hayter, founder of data analysis website Cryptocompare. “(Traders) are taking profits on the increased risk scenarios going forward.”
A director at Germany’s central bank said on Monday that any attempt to regulate cryptocurrencies must be on a global scale as national or regional rules would be hard to enforce on a virtual, borderless community.
By 1000 GMT bitcoin was trading down 16 percent on the day at around $11,500 on Bitstamp.
Reporting by Jemima Kelly; Editing by Tommy Wilkes and Hugh Lawson
EXCLUSIVE: G20 financial heads to urge crypto-asset monitoring to safeguard financial stability
Cryptocurrencies are seen on a website that tracks the value of initial coin offerings (ICO) in this illustration photo taken September 5, 2017. REUTERS/Thomas White/Illustration
BRUSSELS (Reuters) – The world’s financial leaders will call on international standard-setting bodies on March 20 for stronger monitoring of crypto-assets and to assess the need for a multilateral response as such assets could at some point threaten financial stability.
The call appears in a draft communique prepared for the meeting of finance ministers and central bank governors of the world’s 20 biggest economies in Buenos Aires on March 19-20, seen by Reuters.
The financial leaders will say the technological innovation behind crypto-currencies has the potential to improve the efficiency and inclusiveness of the financial system.
“Crypto currencies, however, raise issues with respect to consumer and investor protection, tax evasion, money laundering and terrorist financing. At some point they could have financial stability implications,” the draft communique adds.
“We agree that international standard setting bodies strengthen their monitoring of crypto-assets and their risks… and assess whether multilateral responses may be needed.”
Regulators globally have raised the alarm over cryptocurrencies, saying they may aid money laundering and terrorist financing, hurt consumers and undermine trust in the global financial system.
Japan was the first country to adopt a national system to oversee cryptocurrency trading. It carried out checks on several exchanges this year after the theft of $530 million from one exchange, Coincheck Inc, in January.
France and Germany have said they will make joint proposals to regulate the bitcoin cryptocurrency market.
The head of the European Union’s watchdog said a short-term strategy could be to focus on applying anti-money laundering and terrorist financing rules, warning consumers of the risk of trading in cryptocurrencies and preventing banks from holding them.
The U.S. Securities and Exchange Commission said last week that many online trading platforms for cryptocurrencies should be registered with the regulator and subject to additional rules, in a further sign regulators are cracking down on the digital currency sector.
In a statement, the SEC said these “potentially unlawful” platforms may be giving investors an unearned sense of safety by labeling themselves as “exchanges.” The regulator said these platforms need to register with the SEC as a regulated national securities exchange or as an alternate trading system, or ATS.
Virtual currencies have existed for years but speculation in them has recently ballooned – along with scams promising investors returns of over 1,000 percent in weeks.
In a time of volatile markets, hackers are also active in the sector.
Bitcoin, the best known virtual currency, lost over half its value earlier this year after surging more than 1,300 percent last year.
Reporting By Jan Strupczewski; Editing by Hugh Lawson
Singapore explores rules to protect investors in cryptocurrencies
Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 13, 2018. REUTERS/Dado Ruvic/Illustration
SINGAPORE (Reuters) – Singapore’s central bank is assessing whether additional regulations are required to protect investors in cryptocurrencies, an official said in a speech released on Thursday.
The city-state – which is aiming to be a hub for financial technology and so-called initial coin offerings in Asia – does not regulate virtual currencies and last year called for the public to exercise“extreme caution” over investment in cryptocurrencies.
Its central bank does regulate activities involving virtual currencies if they pose specific risks. For example, it imposes anti-money laundering requirements on intermediaries providing virtual currency services.
“We are assessing if additional regulations are required for investor protection,” Ong Chong Tee, deputy managing director (Financial Supervision), Monetary Authority of Singapore said.
Other countries such as South Korea, where trading in cryptocurrencies is more popular, are looking at ways to regulate that activity.
Reporting by Aradhana Aravindan and John Geddie; Editing by Kim Coghill
Cryptocurrency traders to launch lawsuit against Coincheck on Thursday – lawyer
Cryptocurrency exchange Coincheck’s signboard is pictured in front of a building where their office is located in Tokyo, Japan February 2, 2018. REUTERS/Kim Kyung-Hoon
TOKYO (Reuters) – A group of cryptocurrency traders will file a lawsuit against Coincheck Inc on Thursday over last month’s theft of $530 million (£382 million) in digital money from the Tokyo-based exchange, a lawyer representing the claimants said.
The ten traders will file the claim at the Tokyo District Court over Coincheck’s freezing of cryptocurrency withdrawals, Hiromu Mochizuki, a lawyer representing the plaintiffs, told Reuters.
The traders will request that Coincheck allows them to withdraw cryptocurrencies to “wallets” – folders used for storing digital money – outside the exchange, Mochizuki said. The group may launch a second lawsuit at the end of the month to claim for damages over the heist, he added.
Coincheck representatives did not immediately respond to phone and emailed requests for comment.
The Coincheck incident highlighted the risks in trading an asset that policymakers are struggling to regulate, and has renewed the focus on Japan’s framework for overseeing these exchanges.
The Tokyo-based exchange, which froze all withdrawals of yen and digital currencies following the theft, resumed yen-withdrawals from Tuesday, according to posts on Twitter.
Coincheck said on Friday it would allow customers to withdraw yen after confirming the integrity of its system security. It added it would keep restrictions on cryptocurrency withdrawals until it could guarantee the secure resumption of its operations.
Coincheck is set to file on Tuesday a report with regulators on the heist, the safety of its systems, and measures it will take to prevent a repeat.
Reporting by Thomas WilsonEditing by Shri Navaratnam