SKorea’s Government Plans to Ban Bitcoin Trade
Thursday, SKorea’s government said it plans to ban cryptocurrency trading, sending Bitcoin prices plummeting and throwing the virtual coin market into turmoil as the nation’s police and tax authorities raided local exchanges on alleged tax evasion.
The clampdown in SKorea, a crucial source of global demand for cryptocurrency, came as policymakers around the world struggled to regulate an asset whose value has skyrocketed over the last year.
Justice minister Park Sang-ki said the government was preparing a bill to ban trading of the virtual currency on domestic exchanges.
“There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” Park told a news conference, according to the ministry’s press office.
After the market’s sharp reaction to the announcement, the nation’s Presidential office hours later said a ban on the country’s virtual coin exchanges had not yet been finalised while it was 1 of the measures being considered.
Once a bill is drafted, legislation for an outright ban of virtual coin trading will require a majority vote of the total 297 members of the National Assembly, a process that may take months or even years.
The government’s tough stance triggered a selloff of the cryptocurrency on both local and offshore exchanges.
The local price of bitcoin plunged as much as 21% in midday trade to $17,064.53 after the minister’s comments. It still trades at around a 30% premium compared to other countries.
Currently Bitcoin is trading in Luxembourg at: 13,759.9951, +154.24, or +1.13%, as of 7:55a GMT, the market is open.
SKorea’s cryptocurrency-related shares were also hammered.
Vidente and Omnitel which are stakeholders of Bithumb, skidded by the daily trading limit of 30% each.
Once enforced, SKorea’s ban “will make trading difficult here, but not impossible,” said the chief analyst at EST Security.
“Keen traders, especially hackers, will find it tough to cash out their gains from virtual coin investments in Korea but they can go overseas, for example Japan,” Mun said.
Bitcoin’s 1,400% surge last year has stoked huge demand for cryptocurency in SKorea.
Thursday afternoon, the Justice Ministry’s announcement had prompted more than 55,000 SKoreans to join a petition asking the presidential Blue House to halt the crackdown on the virtual currency, making the Blue House website intermittently unavailable due to heavy traffic, the website showed.
There are more than a dozen cryptocurrency exchanges in SKorea, according to Korea Blockchain Industry Association.
The news of SKorea’s proposed ban came as authorities tightened their grip on some cryptocurrency exchanges.
The nation’s largest cryptocurrency exchanges such as Coinone and Bithumb were raided by police and tax agencies this week for alleged tax evasion. The raids follow moves by the finance ministry to identify ways to tax the market that has become as big as the nation’s small-cap Kosdaq index in terms of daily trading volume.
Bitcoin sank Monday after website CoinMarketCap removed prices from SKorean exchanges, because coins were trading at a premium of about 30% in Asia’s 4-largest economy. That created confusion and triggered a broad selloff among investors.
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