SOUTH Korea’s government said yesterday 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 South Korea, 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 Presidential Office hours later said a ban on the country’s virtual coin exchanges had not yet been finalized while it was one of the measures being considered.
A press official at the ministry said the proposed ban on cryptocurrency trading was announced after “enough discussion” with other government agencies, including the finance ministry and financial regulators.
Once a bill is drafted, legislation for an outright ban of virtual coin trading will require a majority vote of the 297 members of the National Assembly, a process that could take months or even years.
The government’s tough stance triggered a selloff of the cryptocurrency on both local and offshore exchanges.
Once enforced, South Korea’s ban “will make trading difficult here, but not impossible,” said Mun Chong-hyun, 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,” Mun said.