The significant increase in altcoins in terms of price and popularity has raised concerns among South Korean officials. The country’s banking 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 has been good green since the beginning of the year, 2021 is so far in the direction of altcoins. The value of several coins has skyrocketed in recent months, leading to successive all-time highs – just for reference: five of the top ten coins have set new records in the last 24 hours alone.
Additionally, others who seemingly have little to no value behind them, like Dogecoin and copycats like SHIBA INU, have blossomed after reaching the main stage. Double-digit and even triple-digit returns have become the “new normal” that is attracting the masses.
Crypto exchanges are leveraging these trends to list the new hot coin. However, according to a local report, this appears to have become a real problem in South Korea.
It said the Bankers Association believes the rapidly growing number of altcoins on local exchanges increases risk for investors. As a result, it advised its members to examine the listing processes in order to “measure the trading capacity of an exchange in order to appear to reduce risk”.
“One of the criteria we recommend is the security of digital assets, which can be measured by the number of digital coins on an exchange. When an exchange trades too many digital assets, it takes more risks. “- commented an official from the Korea Federation of Banks.
The coverage showed the rapidly growing trading volume of Alts compared to Bitcoin. The largest local crypto exchange – Upbit – recorded a BTC trading volume of just 4.26%, while the altcoins accounted for more than 95% of the remaining.
Regulations in South Korea
The East Asian country has been very active lately in creating a legal framework for the cryptocurrency industry.
Back in March, the authorities introduced a new rule that proposes strict penalties and fines for all virtual asset services (VASP) providers, including exchanges, that do not report suspicious transactions and do not store relevant data.
As a result, some trading venues closed their South Korean branches, including OKEx Korea and Binance Korea.
Regardless, the country plans to introduce a 20% capital tax on profits from crypto trading.
SPECIAL OFFER (sponsored)
Binance Futures 50 USDT FREE Coupon: Use this link to register and get 10% off fees and 50 USDT when trading 500 USDT (limited offer).
PrimeXBT Special Offer: Use this link to register and enter the POTATO50 code to get 50% free bonus on every deposit up to 1 BTC.