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Fears of global crackdown fail to dampen cryptocurrency interest

Crackdown by global regulators should not threaten its existence.
Picture: Shutterstock

Worries about a crackdown by global regulators on cryptocurrency trading could slow the pace of bitcoin’s rise but should not threaten its existence, investors and market participants at a cryptocurrency conference said on Thursday.

At the North American Bitcoin Conference in Miami, investors and executives interviewed by Reuters were unfazed by government moves to further regulate cryptocurrencies, which have sent prices into a tailspin.

“It’s impossible to ban bitcoin and cryptocurrency trading because the more you regulate, the more it will become popular,” said Francesco Nazari Fusetti, co-founder and chief executive officer of Aidcoin and CharityStars, which aims to launch an online auction platform for the non-profit sector.

Bitcoin soared more than 1,700% last year, hitting a record high just shy of $20,000 as institutional and retail investors snapped up the virtual currency on expectations of further steep increases. Its astronomical gains though have attracted the attention of global regulators tasked with protecting investors from fraud.

In recent weeks, Japan and China have made noises about a regulatory crackdown while South Korean policymakers said they are considering shutting down domestic virtual currency exchanges. In addition, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) is “aggressively” pursuing virtual currency platforms that lack strong internal safeguards against money laundering.

Bitcoin plunged to below $10,000 on Wednesday on the Luxembourg-based exchange Bitstamp after the South Korean news. On Thursday however, bitcoin recovered to trade at $11,718 , up 4.6% on the day.

South Korea is the third-largest market in the world for bitcoin trades after Japan and the United States, according to digital currency website Coinhills. Bitcoin trades at roughly a 30% premium in South Korea compared with other countries because of huge demand and monetary restrictions in that country, analysts said.

“Such intervention will further squeeze the already heated South Korean market, further drive up spreads to other markets, and push order flow outside the country,” said Trevor Koverko, chief executive officer of Polymath, whose platform makes it easier for start-up companies to launch security tokens.

Eran Eyal, chief executive officer of Shopin, a project that aims to be the decentralized Amazon of the virtual currency space, believes the efforts by governments will not affect bitcoin in a major way.

“You have to think of what the general trajectory is and the general trajectory is upward for cryptocurrencies and bitcoin,” said Eyal.

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