Wrapup 1: S.Korea considers cryptocurrency tax as regulators grapple with "speculative mania"
13/12/2017 05:30
* S.Korea may tax capital gains on cryptocurrency trading
* Australia c.bank governor warns of "speculative mania"
* Bitcoin weaker, but Bitcoin-related shares in Seoul
recover
By Christine Kim and Cynthia Kim
SEOUL, Dec 13 (Reuters) - South Korea said on Wednesday it
may tax capital gains from cryptocurrecy trading as global
regulators worried about a bubble, with Australia's central bank
chief warning of a 'speculative mania" that has seen the digital
asset making rip-roaring gains.
As bitcoin futures made their world debut on a U.S. stock
exchange this week, policy makers have been forced to contend
with cryptocurrencies becoming more of a mainstream play and the
need to regulate them.
The world's biggest and best known cryptocurrency, bitcoin
BTC=BTSP , surged past $17,000 to new all-time highs this week,
marking an almost dizzying 20-fold rise this year and feeding
fears of a bubble.
Australia's central bank governor Philip Lowe warned on
Wednesday the fascination with the assets felt like a
"speculative mania."
The comments come days after his New Zealand counterpart
said bitcoin appeared to be a "classic case" of a bubble, and
cast doubt on its future. The chairman of the U.S. Securities
and Exchange Commission (SEC) on Monday warned trading and
public offerings in the emerging asset class may be in violation
of federal securities law. urn:newsml:reuters.com:*:nL3N1OC5KK urn:newsml:reuters.com:*:nL1N1OB1XA
Digital currencies are very popular across Asia, with many
retail investors giving up their daily jobs to trade them full
time in countries such as Japan and South Korea, which together
make up for more than half the global trading volumes by some
estimates.
But the possibility of major losses if the bubble bursts and
wild gyrations of 10-30 percent in a single day have instilled a
sense of urgency among policymakers to come up with a regulatory
response.
In Seoul, after an emergency meeting on Wednesday, South
Korea's government said it will consider taxing capital gains
from trading of virtual coins and will also ban minors from
opening accounts on exchanges, according to a statement obtained
by Reuters ahead of its official release.
To be eligible, exchanges in South Korea will need to uphold
investor protection rules and disclose all bid and offer quotes.
urn:newsml:reuters.com:*:nS6N1M402I
The measures need parliamentary approval. Seoul will
maintain a current ban on all financial institutions dealing
virtual currencies.
"The regulations in Korea will not have a negative effect,"
said Thomas Glucksmann, head of marketing at Hong Kong-based
exchange Gatecoin, adding that on the contrary, "licensing
brings certainty, which encourages already regulated entities
... to get involved in addition to sceptical retail investors."
In an interview with Reuters on Tuesday, the Seoul-based
operator of the world's busiest virtual currency exchange
Bithumb, said it will fully comply with potential regulations
from the South Korean government and adequately capitalize
itself to protect its clients. urn:newsml:reuters.com:*:nL3N1OC3CO
Elsewhere in Asia, China in September ordered Beijing-based
cryptocurrency exchanges to stop trading and immediately notify
users of their closure, in a move aimed at limiting risks in the
speculative market. Economists and cryptocurrency advocates say
the move was also intended to close an avenue used to evade
Beijing's capital controls.
Japan requires crypto-currency operators to register with
the government. The Japanese government in April granted
cryptocurrencies legal status as a means of settlement and in
September officially recognised 11 digital currencies exchanges.
CRYPTO COINS WEAKEN
Bitcoin dropped to $16,575 on Wednesday, down 0.5 percent on
the day, after losing $152 from its previous close. On Bithumb,
it was down 2 percent at $17,083. Bitcoin futures maturing in
January on the Cboe Global Markets Inc's Cboe Futures Exchange
XBTF8 were $17,700, having opened at $18,010.
Bitcoin-related shares in Seoul slumped in early trade on
news of the government's emergency meeting, before rebounding as
the statement did not mention harsh restrictions. Vidente Co Ltd
121800.KQ and Omnitel Inc 057680.KQ , which hold stakes of
Bithumb, were up 4 percent and 7 percent, respectively. Bitcoin
mining-related company JCH Systems Inc 033320.KQ were up 1
percent.
While crypto trading has attracted anyone from hedge funds
and finance professionals to housewives and college students, it
is yet to lure institutional asset managers whose mandates
require them to make long-term investments which do not chime
with highly-volatile digital currencies, whose fundamental
values are also difficult to define.
"BlackRock's view is that this isn't a financial asset that
we would trade in terms of equities or fixed income
instruments," said Belinda Boa, head of active investments for
Asia Pacific, BlackRock.
"There are questions around the store of value and the fact
that actually for our clients we're looking at longer term
investments."
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Bitcoin's blistering ascent http://tmsnrt.rs/2AHKJPd
Bitcoin futures http://tmsnrt.rs/2Af4Noa
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(Reporting by Dahee Kim, Cynthia Kim and Christine Kim in SEOUL
and Michelle Chen and Marius Zaharia in Hong Kong; Writing by
Marius Zaharia; Editing by Shri Navaratnam)
((Cynthia.Kim@thomsonreuters.com; 822 3704 5655; Reuters
Messaging: cynthia.kim.thomsonreuters.com@reuters.net))
Keywords: MARKETS BITCOIN/SOUTHKOREA