Korean financial authorities said Tuesday that they have decided not to recognize Bitcoin, or cyber currency, as a real legal currency.
The conclusion came after a week of debate among officials of the Ministry of Strategy and Finance, the Bank of Korea, the Financial Services Commission and the Financial Supervisory Service.
Officials said Bitcoin, which can be traded between individuals online without going through financial institutions such as banks, does not meet standard regulations governing the transactions of currencies via the Internet or commercial institutions.
A Bank of Korea official said the currency has been facing high volatility as it does not have an “intrinsic value,” given that there are no real indicators to measure it against.
Bitcoin trading had recently been increasing worldwide as it was much simpler to make direct transactions between individuals or between e-commerce sites and consumers with lowered intermediate fees.
The value of Bitcoin slid to about $650 as of last week from its high of $1,240 per digital coin at the end of last month.
The crash came as a number of governments raised concerns over the economic feasibility of the cyber currency.
The People’s Bank of China, China’s central bank, banned trading of Bitcoin by banks due to concerns that such a “virtual product” can be misused for money laundering and terrorism financing.
France’s central bank also warned that Bitcoin has the potential to undermine global financial stability.
The Korean financial authorities said that they will strengthen their monitoring of cyber currency trading as a means to prevent any misuse that directly violates its laws concerning money laundering and real-name financial transactions.