SEOUL: South Korea said on Wednesday it may tax capital gains from cryptocurrency trading as global regulators worried about a bubble, with Australia’s central bank chief warning of a ‘speculative mania” that has seen the digital asset making rip-roaring gains.
As bitcoin futures made their world debut on a US stock exchange this week, policy makers have been forced to contend with cryptocurrencies becoming more of a mainstream play and the need to regulate them.
The world’s biggest and best-known cryptocurrency, bitcoin, surged past $17,000 to new all-time highs this week, marking an almost dizzying 20-fold rise this year and feeding fears of a bubble.
Australia’s central bank governor Philip Lowe warned on Wednesday the fascination with the assets felt like a “speculative mania.”
The comments come days after his New Zealand counterpart said bitcoin appeared to be a “classic case” of a bubble, and cast doubt on its future.
The chairman of the US Securities and Exchange Commission (SEC) on Monday warned trading and public offerings in the emerging asset class may be in violation of federal securities law.
Digital currencies are very popular across Asia, with many retail investors giving up their daily jobs to trade them full time in countries such as Japan and South Korea, which together make up for more than half the global trading volumes by some estimates.
But the possibility of major losses if the bubble bursts and wild gyrations of 10-30 per cent in a single day have instilled a sense of urgency among policymakers to come up with a regulatory response.
In Seoul, after an emergency meeting on Wednesday, South Korea’s government said it will consider taxing capital gains from trading of virtual coins and will also ban minors from opening accounts on exchanges.
To be eligible, exchanges in South Korea will need to uphold investor protection rules and disclose all bid and offer quotes. The measures need parliamentary approval.
Seoul will maintain a current ban on all financial institutions dealing virtual currencies.
“The regulations in Korea will not have a negative effect,” said Thomas Glucksmann, head of marketing at Hong Kong-based exchange
Gatecoin. — Reuters
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