Prices of the leading digital currencies fell substantially yesterday, including a fall in price for Bitcoin. The famed digital currency fell almost 50% from its December 2017 peak, going below $10,000 USD for a time. Ethereum fell by 30 percent and recent climber Ripple took a major plunge to below $1 USD.Total market capitalization fell from over $800 billion at the start of January to $460 billion today. Though the reason for such a wide-reaching fall wasn’t initially clear, many cite recent government and regulatory clampdowns for the crash.
After Japan and the US, South Korea is the third largest trader of digital currencies. It’s the largest exchange market for Ethereum and home to a number of the biggest global digital-currency exchanges.Despite nearly one million registered daily traders in digital currencies, the South Korean government remains divided in its stance on the lucrative new markets. The South Korean Justice Ministry threatened a ban and authorities raided major exchanges Coinone and Bithumb. Without support from other South Korean government ministries, the ban didn’t go ahead. A statement from the South Korean Office for Government Policy Coordination declared a decision would be made only “after sufficient consultation and coordination of opinions.” Rumours still abound as to the route the South Korean government will take and varies between regulatory changes to a complete ban.China has already banned local exchanges and could prevent residents from trading digital currencies on foreign exchanges.In a second recent viewpoint from Indonesia, central banks warned investors away from trading digital currencies. They feel digital currencies are a potential threat to the country’s entire financial system.The Bank of Indonesia stated digital currencies are not legal currencies and cannot be used as a payment method in Indonesia. Indonesia has banned fintech companies involved in payment systems from using digital currencies and is looking at regulating exchanges.In other South Asian countries, there are similar movements. India’s Finance Ministry, for instance, also warned investors of the risk of trading digital currencies. The country’s banks then blocked digital currency trading.
Brazil followed seven public hearings on Bitcoin by also banning digital currency from its financial markets. Brazilian regulators ruled that digital currencies are not financial assets, according to Reuters. In Europe, Sweden may become the first country to launch a national digital currency, according to a recent bulletin by HSBC. On January 15th, 2018 France’s Minister of the Economy Bruno Le Maire shared doubts about the “possible financial diversions linked to bitcoin”. In response, he announced a working group, a “digital currencies mission,” that will plan regulatory frameworks for digital currencies.
Closer to home, Canadian and U.S regulatory bodies are quieter on the subject. Both, however, have previously warned investors of the risks associated with digital currency trading and ICO’s. Despite warnings, neither have taken steps to impinge the economic growth digital currencies and blockchain technology could bring.Bank of Canada Governor Stephen Poloz recently raised concerns over the rise of digital currencies in his New Year speech comparing Bitcoin investment to gambling. Despite his warnings, he admitted Canada’s central bank is discussing providing their own form of digital currency.Other contributors to the recent market crash are thought to be the maturing of Bitcoin futures and a general overheating of the market.
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