Signboards show price movements of Bitcoin and other virtual currencies at an exchange in South Korea on April 16. (Yonhap)
Six out of 10 new crypto investors in the first three months of the year were in their 20s and 30s, a report showed April 21, raising concerns that the surging market volatility could pose risks for young amateur investors.
The number of newly opened accounts on the nation’s top four crypto trading platforms -- Upbit, Bithumb, Coinone and Korbit -- came in at 2.5 million between January and March, according to the report released by Rep. Kwon Eun-hee of the opposition People Power Party.
Of the new account holders, 1.58 million, or 63.5 percent, were in their 20s and 30s. A further 36,326, or 1.5 percent, were teenagers.
After seeing hordes of people flock to the extremely volatile crypto market, the government recently sounded the alarm about a potential bubble forming in the crypto sector and vowed to crack down on illegal transactions and fraud. Market watchers also say the overheated crypto market is very concerning.
“The recent crypto fad reminds me of the tulipomania of the past as people are passing over a ‘ticking time bomb’ that is imminent to explode anytime soon,” said Lim Jong-in, the dean of the Graduate School of Information Security at Korea University. “When the ticking bomb goes off, no one will be held accountable while those individual young investors could suffer significant losses.”
Some crypto tokens, like Theta Fuel and Ankr, posted annual growth rates of 10,000-17,000 percent.
Many local market experts have pointed out that most coins are issued by individuals or companies in overseas markets, making it difficult for domestic authorities to put cryptocurrencies under supervision.
Some of the reported risks surrounding the tokens include alleged involvement of crypto assets in crimes and crypto trading platforms often being targeted by hackers.
“Which ministries or agencies should be in charge of handling crypto hacking issues has not been decided yet at the state government, leaving individuals exposed to hacking threats,” Lim said.
In one hacking attack against Upbit in November 2019, the South Korean firm lost some $48.5 million worth of cryptocurrency. Chinese nationals conspiring with the North Korean regime were said to have been behind the attack, according to the US Department of the Treasury’s Office of Foreign Assets Control.
Amid growing concerns over a speculative bubble in the digital coin market, the government has pledged to ramp up its efforts to trace illegal crypto activities.
“Individuals should make careful decisions related to cryptocurrencies as crypto assets, which have no intrinsic value, are used as means of speculation rather than investment,” Gu Yoon-cheol, chief of the Office for Government Policy Coordination, said in a recent press briefing.
Bank of Korea Gov. Lee Ju-yeol also warned of high risks with crypto coins, saying, “Virtual tokens have a number of limits to be adopted as payment means.”
By Kim Young-won (firstname.lastname@example.org)