"KRW 1800 Trillion Virtual Currency... 'Beyond Control' Banned in 25 Countries"

'Eun' Investment-Scale Growth
Rapid Expansion Spurs Global Regulatory Moves
ECB Implements Illegal Trading Tracking System
China Announces Mining Site Ban Policy

Janet Yellen, U.S. Secretary of the Treasury
Photo by AP Yonhap News

[Asia Economy Reporter Kim Suhwan] On the 20th (local time), following the U.S. Treasury Department's announcement to mandate IRS reporting for cryptocurrency transactions exceeding $10,000, regulatory stances worldwide are expected to intensify. Countries such as China and Turkey have already begun actively regulating cryptocurrencies. This move is interpreted as a response to the growing crisis awareness among governments and central banks over the uncontrollable scale of cryptocurrency investments, as well as the need to protect investors from extreme volatility.

Investment Scale Comparable to Silver

[Image source=Reuters Yonhap News]

According to asset analysis site TradingView, the current estimated market capitalization of the cryptocurrency market ($1.5 trillion to $1.6 trillion) is similar to that of silver ($1.5 trillion).

As the scale of cryptocurrency investments rapidly increases to a level that threatens the existing financial system, there have been calls in the U.S. Congress for regulatory authorities to preemptively block risks that could arise from the proliferation of exchanges.

Additionally, with cryptocurrency-related exchange-traded funds (ETFs) launching in Canada and major financial institutions like Goldman Sachs introducing Bitcoin derivatives, signs of institutional adoption of digital assets have emerged, increasing pressure for proactive regulatory measures.

Senator Sherrod Brown, chairman of the U.S. Senate Banking Committee, sent a letter to the government on the 19th stating, "Current legal provisions that facilitate the establishment and operation of cryptocurrency-related companies risk causing investors to underestimate the risks of cryptocurrency assets," and warned that this "could threaten stability across the entire financial system."

Senator Brown also urged Michael Hsu, acting head of the Office of the Comptroller of the Currency (OCC), the banking supervisory agency, to reconsider the nationwide conversion of three stablecoin issuers, including Paxos, into digital asset banks.

Politico reported, "Hsu is likely to significantly revise the current regulatory framework that makes it easy for banks to engage in digital asset transactions."

Warnings from China and Europe

The European Central Bank (ECB) has warned of a cryptocurrency bubble, recently likening the rapid price surge to the "Tulip Mania." Tulip Mania refers to the 17th-century speculative frenzy in the Netherlands where tulip prices rose fiftyfold within a month before crashing.

In a report released on the 19th, the ECB stated, "Investment concentration in cryptocurrency assets is excessive," and expressed concerns that cryptocurrencies could be used for illegal transactions. The European Union (EU) plans to fully implement the 6th Anti-Money Laundering Directive (6AMLD) from June 3, mandating all cryptocurrency exchanges to install mechanisms to track illicit transactions and report them to regulatory authorities.

China has banned the issuance and trading of private cryptocurrencies such as Bitcoin and, on the 18th, announced plans to prohibit all cryptocurrency-related services, including insurance, account opening, and currency exchange.

China is also moving to ban cryptocurrency mining. Earlier, the Inner Mongolia Autonomous Region announced a policy to shut down all cryptocurrency mining farms within the year due to power waste concerns and reportedly began operating a reporting system for mining farms from the 18th.

Cryptocurrency mining refers to performing complex computational processes using computers to receive cryptocurrencies as rewards, analogous to mining minerals in a mine. Research has shown that the electricity consumption for mining exceeds the annual power usage of countries like Argentina and Sweden, raising criticism over the energy waste associated with cryptocurrencies.

Chinese President Xi Jinping is treating energy conservation as a national core agenda, making it highly likely that a tough regulatory drive against cryptocurrencies will be pursued as part of this effort. According to the Cambridge Centre for Alternative Finance (CCAF), as of April last year, 65.08% of global Bitcoin mining occurred in China. If regulations expand from Inner Mongolia to other key mining regions such as Xinjiang and Sichuan, it is expected to have a significant impact on the overall cryptocurrency market.

25 Countries Worldwide Ban Cryptocurrency Trading

List of countries that have completely banned the cryptocurrency market [Image source=U.S. Congressional Library website]

According to the U.S. Congressional Research Service, countries that have completely banned cryptocurrency trading, including Bitcoin, are Algeria, Bolivia, Morocco, Nepal, Pakistan, Vietnam, Egypt, Iraq, and the UAE. Including countries that have no formal ban but effectively prohibit trading, such as China, Colombia, Iran, Macau, Taiwan, Thailand, Qatar, Lithuania, and Kuwait, the total number of countries banning cryptocurrency trading rises to 25.

This content was produced with the assistance of AI translation services.