Head of FTC muddies the waters over bitcoin again

The Korean government’s clear-as-mud view of cryptocurrency trading and China’s crackdown on transactions continued to roil markets for bitcoin and other virtual tokens Wednesday, sending prices plummeting.

A top government official outlined the legal difficulties Seoul would face if it tried to ban cryptocurrency trading platforms - a move it threatened last week and then pulled back on.

“It is a clear reality that there is no related legislation [to ban cryptocurrency exchanges],” said Kim Sang-jo, head of Fair Trade Commission, on a radio show.

“If needed, [the government could] introduce new rules and regulations that are in line with market principles,” the antitrust czar said.

The Fair Trade Commission is investigating whether local cryptocurrency exchanges abide by electronic commerce laws.

Kim’s comments set a slightly different tone from those made by Finance Minister Kim Dong-yeon on Tuesday, adding to the government’s serial flip-flopping on the regulation of cryptocurrencies.

The minister said that an enforced shutdown of bitcoin exchanges is “a possible option,” although it would require serious discussions.

Those remarks prompted bitcoin to tumble on Tuesday, as it dipped into the 15 million won ($14,020) range after opening at 19.4 million won, according to Bithumb.

The price dropped more on Wednesday.

Bitcoin slumped to as low as 12.5 million won at 7:30 a.m. though it recovered to the 13 million won level as of press time.

Global bitcoin prices also went lower on Wednesday, as it lost 14 percent to reach $10,779.6, according to cryptocurrency price-checking website CoinMarketCap.

The steep decline followed multiple reports that Chinese authorities plan to widen their crackdown on domestic investors who are using new platforms after Beijing shut all domestic exchanges in September.

The Chinese government will likely target different forms of trading and offshore sites trading cryptocurrencies.

Unlike the determined Chinese authorities, Korea’s government and local banks have continually shifted their stances on operation of the exchanges and the opening of new bank accounts for trading.

The country’s financial regulator ordered banks to stop opening new accounts until they establish a real-name verification service and a system designed to prevent money laundering.

But news reports on Friday that Shinhan Bank would put the adoption of real name policies on hold and stop issuing trading accounts altogether confused investors. Over the weekend, the banks said they would stick to initial plans to allow clients to open real-name accounts for cryptocurrency transactions this month.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]