A Bitcoin Frenzy Like No Other Is Gripping South Korea

Like thousands of South Koreans, Moonsung Bae is infatuated by bitcoin.

The 35-year-old financial analyst got his first taste a year ago, before the cryptocurrency exploded into one of the wildest investment stories of our time, and by the end of last month his personal holdings had swelled to half his liquid assets.

“I had this fear when I first bought,” Bae said. “But then I realized, oh, it actually works.”

It’s certainly worked, at least so far, for those who got in early and rode the speculative wave that pushed the cryptocurrency above $14,000 on Thursday. But where bitcoin and its ilk go from here is the subject of fierce debate, nowhere more so than in Korea, which has emerged as a sort of ground zero for the global crypto-mania.

So many Koreans have embraced bitcoin that the prime minister recently warned that cryptocurrencies might corrupt the nation’s youth. The craze has spread so far that, in Korea, bitcoin is trading at a premium of about 23 percent over prevailing international rates.

While neighboring Japan hosts more transactions by some measures, Korea punches far above its weight: In the 24-hour period through Wednesday evening in Seoul, about 21 percent of the world’s bitcoin trades on fee-charging venues involved the Korean won, according to Coinmarketcap.com. The country accounts for about 1.9 percent of the global economy.

As Korean policy makers grow increasingly worried that the mania has gone too far, the nation could become a focus for bitcoin traders around the world. Korea’s top financial watchdog, which briefly roiled cryptocurrency markets with its ban on initial coin offerings in September, said this week that it has “grave concerns” about overheated speculation and has formed a task force with other government bodies to increase supervision.

“Given the size of the market, there’s a greater need for them to come up with something soon,” said Thomas Glucksmann, Hong Kong-based head of marketing at cryptocurrency exchange Gatecoin Ltd…

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