The significant rise of the altcoins in price and popularity has raised concerns among South Korean officials. The nation’s bank association has advised its members to investigate the rapidly growing number of alternative coins available for trading on crypto exchanges.
South Korea Warning for Altcoins
Although bitcoin is well in green since the start of the year, 2021 is so far going towards the altcoins. Multiple coins have skyrocketed in value in recent months, leading to consecutive all-time highs – just for reference, five out of the top ten marked new records in the past 24 hours alone.
Furthermore, others that seemingly have little-to-no value behind them, like Dogecoin and copycats such as SHIBA INU, have blossomed after reaching the main stage. Double- and even triple-digit returns have become the “new normal,” which attracts the masses.
It informed that the bank association believes the rapidly growing number of altcoins on local exchanges is increasing the risks for investors. Consequently, it advised its members to examine the listing processes to “gauge the trading capacity of an exchange, in an apparent move to reduce exposure to risks.”
“One of the criteria that we recommend is the safety of digital assets, and that can be measured by the number of digital coins on an exchange. If an exchange deals with too many digital assets, it takes on more risks.” – commented an official of Korea Federation of Banks.
The coverage outlined the rapidly growing trading volume of alts compared to bitcoin. The largest local crypto exchange – Upbit – saw a BTC trading volume of just 4.26%, while the altcoins were responsible for the remaining more than 95%.
Regulations in South Korea
The East Asian country has been quite active in terms of establishing a legislative framework around the cryptocurrency industry lately.
Back in March, the authorities implemented a new rule suggesting hefty penalty standards and fines for all virtual asset services providers (VASPs), including exchanges, that fail to report suspicious transactions and keep relevant data.
As a result, some trading venues halted their South Korean branches, including OKEx Korea and Binance Korea.
Separately, the country plans to implement a 20% capital tax on profits made by crypto trading.