Bitcoins have begun trading on the New York Stock Exchange, as The Securities and Exchange Commission approved the first exchange-traded funds(ETFs) that hold Bitcoin. This is the first instance where a virtual asset recognized as an ultra-risky asset has entered the world’s largest financial market.
Up until this point in time, Bitcoin was only able to be purchased and sold on cryptocurrency exchanges, and not on stock markets. In the majority of countries, virtual assets are seldom managed and monitored by financial authorities, and there are no applicable laws and regulations in place, which makes it difficult for institutions to invest significant amounts of money. However, once Bitcoin is approved by U.S. authorities and becomes a stock market product, institutional investors will have the opportunity to invest in it. This could potentially result in a significant increase in the amount of money invested in virtual assets.
It is expected that the investment in cryptocurrency will focus on established and functional assets such as Bitcoin and Ethereum, which are widely used in major countries including the U.S. The market will be discriminating gems from pebbles. In that case, altcoins that are unstable, untrustworthy, and lack a specific purpose are likely to be left behind. The so-called “kimchi coins” issued by Koreans and used only in Korea are expected to suffer. In fact, while Bitcoin, Ethereum, and other cryptocurrencies have been rising since October last year ahead of their inclusion in the system, the market price of domestic kimchi coins has been stagnant.
The Korean virtual asset market has been moving away from the global trend. While the trading rate of the top 10 virtual assets in the global market is 84.9 percent, it is low at 59 percent in Korea. Instead, the trading rate of altcoins without a specific purpose is 41 percent, making it an easy target for market manipulation. The market was extremely chaotic, leading market manipulators to issue unidentified coins to drive up prices by 1000 percent within a single day. Investors would go into debt in anticipation of the hype, leading to the creation of a “coin fever.” Upon analysis, it was found that nine out of ten “kimchi coins” experienced a sharp rise in price followed by an equally sharp fall.
Crimes also continued, and in March of last year, a woman in her 40s was murdered for hire by a group of criminals connected by virtual asset investments. At the end of the year, a coin fraudster named Park who is said to commit a coin swindle of $76 million (100 billion won), was arrested while attempting an illegal entry into China. As virtual assets move into the system, we will need to further develop the system and prepare relevant legislation. We must no longer allow it to become a playground for fraudsters and speculators outside the system.
