Bitcoin Tumbles Over Exchange-Closure Fears

While there's no indication Asia's No. 4 economy will shutter exchanges that have accounted by some measures for more than a fifth of global trading, the news is a warning as regulators express concerns about private digital currencies.

South Korea will require real-name cryptocurrency transactions and impose a ban on the offering of virtual accounts by banks to crypto-exchanges, according to a statement from the Office for Government Policy Coordination. 

Bitcoin was trading at about a 30 percent premium over prevailing international rates on Thursday in Seoul, according to price data from local exchanges, a continuing sign of the country's obsession, and the difficulty in arbitraging between markets.

"Cryptocurrency speculation has been irrationally overheated in Korea," the government said in the statement, which comes little more than a week after the bankruptcy filing of one South Korean exchange. "The government can't leave the abnormal situation of speculation any longer."

Singapore's monetary authority warned last week that digital currency buyers should be aware they could lose all their money, joining counterparts who've warned about speculative mania surrounding bitcoin, which has surged more than 1,300 percent this year.

"Regulators are getting so concerned that this is primarily and predominantly a retail phenomenon," said Stephen Innes, head of trading for Asia Pacific at Oanda. "Regulators not only in Asia but globally are going to start addressing this fact because I don't think they've actually come to terms with what the absolute downside of a complete drop in crypto means for the economy."