Bitcoin hit a three-week high on Tuesday and has surged nearly 100 percent from its lowest level this year, as its recovery continued after South Korea’s financial regulator eased its stance on cryptocurrencies, weeks after it considered shutting down digital currency exchanges.
A better deal for South Korea’s cryptocurrency industry might be in the offing as the market regulator changes tack from its tough stance on the virtual coin trade, promising instead to help promote blockchain technology.
The regulator said on Tuesday that it hopes to see South Korea - which has become a hub for cryptocurrency trade - normalize the virtual coin business in a self-regulatory environment.
“The whole world is now framing the outline (for cryptocurrency) and therefore (the government) should rather work more on normalization than increasing regulation,” Choe Heung-sik, chief of South Korea’s Finance Supervisory Service (FSS), told reporters.
The latest news suggests authorities might adopt a lighter regulatory touch, a step change from the justice minister’s warnings in January that the government was considering shutting down local cryptocurrency exchanges, throwing the market into turmoil.
“While the threat of heavy regulation, or even a total ban on exchange trading, has hovered over bitcoin in recent weeks, reports this morning that the South Korean government are softening their stance have given traders confidence to buy,” said Dennis de Jong, managing director, at online brokerage UFX.com in Limassol, Cyprus.
South Korea has been pushing for broad regulatory supervision of cryptocurrency trading as locals, including students and housewives, have entered the market despite inherent risks and warnings from policymakers around the world of a bubble.
Seoul previously said it was considering shutting down local cryptocurrency exchanges, which threw the market into turmoil and hammered bitcoin prices. Officials later clarified an outright ban is only one of the steps being considered, and a final decision was yet to be made.
On the Luxembourg-based Bitstamp exchange, bitcoin hit a three-week high of $11,722.58 BTC=BTSP on Tuesday. It was last up 3.4 percent at $11,555. From this year's low of $5,920 in early February, bitcoin has surged nearly 100 percent.
“Bitcoin’s price history suggests that months of consolidation are followed by weeks of rapid advancement,” said Canaccord Genuity in its latest research note.
“The safest way to benefit from potential bitcoin price appreciation is to buy and hold for the long term; trying to time it might be too difficult.”
Bitcoin has been pressured this year by a slew of regulatory initiatives around the world, including the incidence of hacks on exchanges. The latest hack occurred a few weeks ago when roughly $532.9 million in digital money was stolen from Tokyo-based cryptocurrency exchange Coincheck.
Other digital currencies, however, showed mixed results, diverging from bitcoin for now. Ethereum, the second-largest by market value, was down 1.3 percent over the past 24 hours at $935.02, while the third-largest, Ripple, fell 1.6 percent to $1.13, according to cryptocurrency price tracker coinmarketcap.com.
Litecoin, the fifth largest cryptocurrency by market capitalization, was one of the biggest gainers with a 9.3 percent rise at $246.03. The currency jumped as much as 10 percent after a “hard fork” resulted in the creation of a new cryptocurrency called litecoin cash.
'Zero yen' at Japanese cryptocurrency exchange
A Japanese cryptocurrency exchange undergoing checks by regulators has said a system failure let investors briefly trade a digital currency for zero yen, highlighting security concerns about such assets after last month's cyber heist at Coincheck Inc.
Zaif, an exchange run by Osaka-based Tech Bureau Corp, said on Tuesday a problem in its price calculation system allowed seven customers to trade a cryptocurrency with no yen value for around 20 minutes on Feb. 16.
It was unclear if the customers realised they were trading the digital asset for zero yen, or were somehow blindsided for a brief moment.
The exchange said it had corrected the customers' balances to account for any trades of the cryptocurrency made at zero yen. It added that it had resolved the issue with six of the customers and was still doing so with the remaining one.
Zaif did not give further details, or identify the cryptocurrency affected by the system error. Tech Bureau officials were not immediately available for further comment.
The incident comes after hackers stole $530 million in digital money from Coincheck last month, sparking checks by regulators of Japan's other exchange operators, including Tech Bureau.