South Korea authorities have placed a ban on bitcoin futures over volatility concerns. The government is reportedly planning to shut down cryptocurrency exchanges as early as this week since they encourage “illegal fundraising.”
According to the country’s news organizations, the Financial Services Commission of Korea has just prohibited local traders from placing their bets on bitcoin futures despite their tremendous popularity overseas.
Earlier this year, the government shut down initial coin offerings (ICOs) for virtual currencies including bitcoin. During ICOs, various firms issue their own means of investment to raise funds.
In South Korea, bitcoin is immensely popular. According to several estimates, between 21% and 25% of all bitcoin transactions are done in Korea. Experts believe that South Koreans’ high-risk appetite may have been spurred by the close vicinity to North Korea.
One expert noted that the population’s trust in the system is at an all-time low after the recent political meltdown, nuclear threats from North Korea, and the corruption scandal involving the Samsung CEO and high-ranking government officials.
Bitcoin’s creators have envisioned it as an alternative to currencies dependent on central banks. Freedom from the banking system and government outreach are two of the reasons the digital currency has risen to fame o quickly.
Bitcoin Futures Highly Volatile
After the United States allowed bitcoin futures to be traded on one of its largest exchanges, the Chicago-based CBOE, the price of the cryptocurrency has seesawed before stabilizing at $17,000 on Sunday night.
After the U.S. exchange’s website crashed, the price of bitcoin jumped even higher. In the U.S., there were gains of 20% in just one day. In South Korea, the price soared 30% between Sunday and Monday.
The U.S. regulators decision to greenlight bitcoin futures granted institutional investors access to the controversial cryptocurrency. They are now allowed to bet on the digital coin’s future market value without even having one bitcoin in their portfolio. Yet, the practice could make the derivative highly volatile.
Image Source: Army.mil
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