Bitcoin futures lead to a spike
The price of bitcoin punched through the 20 million won ($18,200) threshold for the first time on early Friday at Bithumb, the country’s largest virtual currency exchange.
It climbed as high as 24.8 million won at 10 a.m., though it later moderated to 22.2 million won as of press time, up 16 percent from the previous day.
This is considered steep even compared to exchanges in the United States, the largest bitcoin trading country, given that the price remains in the $15,000 range.
Chicago exchanges CME Group and CBOE Global Markets are gearing up for the introduction of bitcoin future contracts in the coming weeks after the two bodies received the green light from the Commodity Futures Trading Commission last week.
This means that at least in the United States, the biggest digital currency will be part of a regulated financial market, allowing bitcoin investors to go long or short.
But earlier this week, Korean regulators made it clear bitcoin is banned from being traded in the local futures market.
While the chief lobby group for futures brokers, the Futures Industry Association in the United States, warned that the system is ill-prepared for the new type of contract, others see the positive side of easing high volatility.
“We think bitcoin’s trade in the futures market is the most important incident since the birth of bitcoin,” said Ray Ahn, an analyst at Korea Investment and Securities. “With the launch in the futures market, more institutional investors will invest in bitcoin since they were pushed back because of the high risk associated with bitcoin payment.”
He added, “The influx of institutional investors could lower high volatility because the participation would make bitcoin less prone to speculative investment by individuals.”
The spike came as the Korean government steps up its policing on the cryptocurrency.
Earlier this week, the government shifted authority over regulation of cryptocurrencies from the Financial Services Commission to the Ministry of Justice.
The move reflects the authorities’ stance on bitcoin, as they consider cryptocurrency trading more like speculation or gambling than dealing with a legitimate financial product.
The Bank of Korea, the country’s central bank, has also reiterated that it does not consider bitcoin is a legitimate currency.
The government also launched a task force to “implement strict regulations on cryptocurrency trading.”
Korea is not alone in its mistrust of bitcoin. Indonesia’s central bank on Thursday said it issued a new regulation prohibiting the use of cryptocurrencies, including bitcoin, for any transaction.
BY PARK EUN-JEE [email@example.com]
with the Korea JoongAng Daily
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