South Korea’s government agencies and financial regulators concluded on June 18 that the rising prices of cryptocurrencies, such as Bitcoin and Ethereum, are based on speculation, rather than investment.
Some officials from financial authorities said, “The recent rise in cryptocurrency prices has taken on a speculation aspect.” An official said, “It is a clear speculation. In particular, it is difficult to evaluate the value of an initial coin offering (ICO), which issues a new coin, so it can make unreasonable profits.”
Not only financial regulators but also prosecution, police and the National Intelligence Service (NIS) are keeping an eye on the virtual currency market. As the number of fraud cases using Bitcoin is rapidly increasing, the prosecution have already asked financial regulators to come up with stronger measures several times and the NIS doubts that the recent Bitcoin price hikes can be an illusion created by virtual money business operators.
In the U.S., one third of transactions, a major determinant in pricing the virtual money, are made between coin exchanges instead of individual investors, and there are suspicions that some exchanges traded customers’ coins without their permission in order to increase the volume of transactions. So, there is a growing concern for domestic exchanges as well.
However, the financial authorities cannot intervene in the virtual currency market. This is because they have no authority to supervise or restrain the virtual currency market and discussions for new systems make slow progress. The government set up a task force team consisting of the Financial Services Commission (FSC), Bank of Korea, Financial Supervisory Service (FSS) and academic and legal experts to institutionalize virtual currency at the end of last year, and was supposed to announce the outcome of discussions within this month. However, it has even failed to agree on whether the virtual currency should be included in systems right now and how the systems will work if it is included.
An official from the FSC said, “Currently, every country has different points of view on virtual currencies and there is no consensus across governments on directions. There is also a lack of systems that can be referred. So, we should approach the matter cautiously.” Accordingly, it is still unclear when the Bitcoin exchange registration systems that the market expects can be introduced.