“Cryptocurrency speculation has been irrationally overheated in Korea,” the government said in a statement, while adding that officials would discuss further potential moves to stem speculative trading, such as shutting down some virtual currency exchanges. “The government can’t let this abnormal situation of speculation go on any longer.”
The authorities have taken other steps to rein in the market. In September, South Korea’s financial regulator banned initial coin offerings, a way for start-ups and online projects to raise money by creating and selling their own virtual currencies.
Government officials, including the prime minister, Lee Nak-yeon, have made no secret of their concerns about investor frenzy.
“This can lead to serious distortion or social pathological phenomena, if left unaddressed,” Mr. Lee said after a cabinet meeting in November.
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Kim Jin-hwa, who heads an industry association for businesses working with virtual currencies and other applications of blockchain technology in South Korea, said most of the country’s virtual currency exchanges could already verify customers’ identities via their cellphones. The exchanges, Mr. Kim said, had also worked with banks to develop new measures for ensuring transparency.
The government is more interested in sending a warning to investors about the potentially overheated market, said S. G. Lee, chairman of the Korea Fintech Industry Association.
Mr. Lee, who is no relation to the prime minister, said he believed that the government had been hoping to cool the speculative fervor merely by discussing tighter regulation — and not by actually implementing too many rules. Officials worry, Mr. Lee said, that more regulation would give virtual currencies greater legitimacy in the eyes of the public, and increase trading activity.
“It’s really tricky for the government,” Mr. Lee said. “They are worried about giving a wrong perception to the people.”