Bitcoin price tumbles after South Korea joins cryptocurrency crackdown

^{Bitcoin dropped as fourth country announces plans to regulate cryptocurrency CREDIT: BLOOMBERG}
Bitcoin fell more than 11pc on Thursday after South Korea announced a clampdown on cryptocurrency.

The new rules will target anonymous trading of virtual currencies and crack down on money laundering activities, Seoul said.

South Korea is a hub for digital currency trading, reportedly accounting for 20pc of global Bitcoin transactions.

Regulation will including a ban on opening anonymous accounts and new legislation to allow regulators to close virtual currency exchanges.

"Officials share the view that virtual currency trading is overheating irrationally ... and we can no longer overlook this abnormal speculative situation," Hong Nam-ki, thw South Korean minister for government policy co-ordination said. Anonymous accounts currently in use will be closed next month, it added, without explaining how it planned to do this.

Money laundering activities and financial fraud like price manipulation are a growing concern. "We will ... resolutely respond to such crimes by slapping maximum sentences possible on offenders," it said, promising to "leave all policy options open, including closure of a cryptocurrency exchange when deemed necessary."

A fortnight ago Seoul banned financial firms from dealing in Bitcoin and other virtual currencies. Thursday's announcement caused Bitcoin to tumble from $15,300 (£11,400) to as low as $13,700.

Israel, China and Russia have announced similar plans to reign in trading of digital coins as its popularity has soared.

Bitcoin hit a record high of just under $20,000 earlier this month - increasing more than 25 times its price in the beginning of 2017. It suffered a pre-Christmas tumble, dropping 30pc in one day last week, but stabilised at around $16,000 on Wednesday.

^{A man walks past a bitcoin ATM CREDIT: REUTERS}
It is understood that one million South Koreans own Bitcoin and demand is so high that prices are around 20pc higher than in the US.

Two South Korean cryptocurrency exchanges were hacked this year, with Kim Jong-un's North Korean regime widely regarded to be the culprits. North Korean hackers are believed to be behind a heist that lost an exchange called YouBit nearly 4,000 Bitcoins in April, according to South Korean reports. On December 19 it was hacked for a second time, forcing it to file for bankruptcy.

Thieves made off with $70m worth of Bitcoin after hacking another Seoul-based exchange called NiceHash.

The largest digital exchange in South Korea is Bithumb which accounts for 70pc of the country's cryptocurrency. Bitcoin exchanges and wallets are prime targets for hackers and it is feared they will become more vulnerable as valuations rise.

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