Bitcoin: South Korea flags ban on cryptocurrency trading, sending prices plummeting

Updated

The South Korean Government has flagged a ban on cryptocurrency trading, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil.

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.

"There are great concerns regarding virtual currencies and [the] Justice Ministry is basically preparing a bill to ban cryptocurrency trading through exchanges," Justice Minister Park Sang-ki said in a press conference.

A press official said the proposed ban on cryptocurrency trading was announced after "enough discussion" with other government agencies, including the nation's finance ministry and financial regulators.

Once a bill is drafted, legislation for an outright ban of virtual coin trading would require a majority vote of the total 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.

The local price of bitcoin plunged as much as 21 per cent in midday trade to 18.3 million won ($21,700) after the minister's comments.

It still trades at around a 30 per cent premium compared to other countries.

Bitcoin was down more than 10 per cent on the Luxembourg-based Bitstamp at $US13,199 ($16,762), after earlier dropping as low as $13,120 ($16,658), its weakest since January 2.

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, for example Japan," Mr Mun said.

Park Nok-sun, a cryptocurrency analyst at NH Investment & Securities, said the herd behaviour in South Korea's virtual coin market had raised concerns.

Indeed, bitcoin's 1,500 per cent surge last year has stoked huge demand for cryptocurrency in South Korea, drawing college students to housewives and sparking worries of a gambling addiction.

"Some officials are pushing for stronger and stronger regulations because they only see more [investors] jumping in, not out," Mr Park said.

By Thursday afternoon, the Justice Ministry's announcement had prompted more than 55,000 South Koreans 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.

Reuters

Topics: currency, stockmarket, internet-culture, information-and-communication, banking, korea-republic-of

First posted</s>The cryptocurrency market is trading in red amid reports that the South Korean justice department is moving to prepare a bill that would ban trading of the digital currencies on domestic crypto exchanges, according to Reuters.

At a press conference, justice minister Park Sang-ki said, “There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges.” (Source: “South Korea plans to ban cryptocurrency trading, rattles.

The post Will South Korea Ban Its Cryptocurrency Exchanges? appeared first on Profit Confidential.

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This post was syndicated from Cryptocurrency – Stock Market Advice | Investment Newsletters – Profit Confidential. Click here to read the full text on the original website.</s>The Ministry of Justice is preparing a bill to curb overheating in the cryptocurrency market, including a shutdown of all cryptocurrency exchanges in the country.

The local price of bitcoin plunged to 18.3 million won ($17,064.53) after the ministry announced the plan to potenially ban trading of cryptocurrencies.

"There are great concerns regarding virtual currencies and the Ministry of Justice is preparing a bill to ban cryptocurrency trading through exchanges," Justice Minister Park Sang-ki said at a New Year's press conference on Thursday. "We are aiming for a shutdown of exchanges."

"Cryptocurrency trading has started to resemble gambling and speculation. I think it's more accurate to see it as a virtual token rather than a virtual currency," the minister said.

His remarks are in line with the government's additional special measures issued last December to curb virtual currency speculation.

"The fact that media have used the phrase 'Kimchi premium' reflects foreigners' assessment that the cryptocurrency trading in the Korean market is abnormal," the minister said.

Park said that discussions about shutting down virtual currency exchanges are proceeding without any disagreement among the government agencies, and that various measures will be made through discussions with related ministries.

"The Ministry of Justice has been negative about cryptocurrency trading since the beginning," the minister said. "It has become more speculative than other countries. It has more harmful effects economically. While coordinating the ministries' views, the justice ministry decided to enact a special law. Measures are being prepared and will be implemented to eliminate the problem."

The minister stressed the danger of the current form of trading in the cryptocurrency market, saying, "The government warns that cryptocurrency trading can be extremely dangerous. It's different from other financial-related damages in the past. Continuous investment or trading can result in tremendous losses."</s>SEOUL, Jan 11 (Reuters) - South Korea’s justice minister said on Thursday the ministry is preparing a bill to ban cryptocurrency trading through its exchanges.

“There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” said Park Sang-ki at a press conference, according to the ministry’s press office.

He added that he cannot disclose details about the proposed shutdown of virtual currency exchanges but will jointly work with the government task force.</s>South Korea's justice ministry appeared to have softened its stance after remarks from its chief on Thursday saw billions wiped off the global cryptocurrency market.

News agency Yonhap reported the ministry explained that the ban was not a done deal in a text message to reporters on Thursday.

"The ministry has been preparing a special law to shut down all cryptocurrency exchanges, but we will push for it after careful consideration with related government agencies," the ministry said.

CNBC reached out to the justice ministry for further clarification, but did not immediately hear back.

On Thursday, Justice Minister Park Sang-ki said at a press briefing that there were "great concerns regarding virtual currencies" and that the ministry was "basically preparing a bill to ban cryptocurrency trading through exchanges."

Park said he couldn't disclose more specific details about a proposed shutdown of cryptocurrency trading exchanges in the country, adding that various government agencies would work together to implement several measures.

News of his ministry's plans roiled the cryptocurrency market and bitcoin price fell as much as 12 percent in the aftermath.

Later in the day, however, South Korea's presidential office emphasized that any potential bill is not a final measure.

"Justice Minister Park Sang-ki's remarks regarding the shutdown of cryptocurrency exchanges is one of the measures that have been prepared by the Justice Ministry, but it is not a finalized decision and will be finalized through discussion and a coordination process with each government ministry," the chief press secretary to President Moon Jae-in said in a statement reported by Yonhap.

Even if a bill aiming to ban all cryptocurrency trading is drafted, it will require a majority vote in the country's National Assembly before it can be enacted into law. That process could take months — or even years.

On Friday morning at 8:27 a.m. HK/SIN, bitcoin traded at $13,013.1 and ethereum traded at $1,138.3, according to CoinDesk data.

South Korea is one of the biggest markets for major coins like bitcoin and ethereum.

According to industry website CryptoCompare, more than 10 percent of ethereum is traded against the South Korean won — the second largest concentration in terms of fiat currencies behind the dollar. Meanwhile, 4.3 percent of all bitcoin are traded against the won.

Cryptocurrency trading in the country is very speculative and the prices of bitcoin, ethereum and other coins are significantly higher than elsewhere in the world. Authorities have taken steps in recent months to limit speculation in the market, including prohibiting cryptocurrency exchanges from issuing new trading accounts.

Last month, the government also said it would consider taxing capital gains from trading of virtual coins, according to Reuters.</s>And what one country does, others usually follow. Or at least that seemed to be the fear on the cryptocurrency markets today. After the news of a potential South Korean cryptocurrency trading ban hit, $100 million was wiped off the global cryptocurrency market, CNBC reports. On Thursday South Korean Justice Minister Park Sang-ki said that the ministry is “basically preparing a bill to ban cryptocurrency trading through exchanges”–a shocker considering South Korea is one of the world’s major cryptocurrency trading markets. Maybe Warren Buffett is right to be bearish on cryptocurrencies.MG</s>There will be no cryptocurrency trading ban in the short-term in South Korea, according to the Blue Office, the executive office and official residence of the country’s head of state.

"All government ministries agree on the need for a government response to an overheating in cryptocurrency speculation and for a degree of regulation," FInance Minister Kim Dong-yeon told reporters, as quoted by the news agency Yonhap.

"The issue of banning exchanges that the justice minister talked about yesterday is a proposal by the Justice Ministry and it needs more coordination among ministries," Kim added.

Friday’s news comes after a major wave of criticism was aroused in South Korea following the previous day’s announcement by the Ministry of Justice, stating its plans to ban cryptocurrency trading. It seems the Ministry of Justice acted independently and without the consent of other government agencies.

More than 60,000 Koreans have signed a petition against the mooted cryptocurrency trading ban and for the dismissal of the head of the Ministry of Justice Park Sang-ki, who announced the upcoming ban. South Korea is one of the largest hubs for cryptocurrency mining and trading.

The largest cryptocurrency, bitcoin, was trading flat on the news at $13,822, still more than 30 percent down on its $20,000 peak of December 17.

Cryptocurrency trading in South Korea is highly speculative, resembling gambling closely even by financial standards, and tokens like bitcoin and ethereum are priced far higher than on other exchanges.

For example, bitcoin was trading near $18,000 on Korean exchange Bithumb, a 33 percent difference compared with other exchanges. Coinmarketcap, one of the most renowned cryptocurrency indices, has removed a group of Korean exchanges from its data set because of the difference.

In December, South Korea announced it was banning cryptocurrency exchanges from issuing new trading accounts. If the ruling is violated, the exchange can be shut down, the authorities said. The South Korean commission added that all cryptocurrency trading should be done under individuals’ real names.

For more stories on economy & finance visit RT's business section</s>SEOUL (REUTERS) -South Korea's justice minister said on Thursday (Jan 11) the government is preparing a bill to ban cryptocurrency trading, 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 policymaker around the world struggled to regulate an asset whose value has skyrocketed over the last year.

"There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges," said Park Sang Ki at a press conference, according to the ministry's press office.

A press official said the proposed ban on cryptocurrency trading was announced after "enough discussion" with other government agencies including the nation's finance ministry and financial regulators.

The nation's largest cryptocurrency exchanges like 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.

Park Nok Sun, a cryptocurrency analyst at NH Investment & Securities, said the herd behaviour in South Korea's virtual coin market has stoked concerns.

Indeed, Bitcoin's 1,500 per cent surge last year has stoked huge demand for cryptocurency in South Korea, drawing college students to housewives and sparking worries of a gambling addiction.

"Virtual coins trade at a hefty premium in South Korea, and that is herd behaviour showing how strong demand is here," Park said.

"Some officials are pushing for stronger and stronger regulations because they only see more (investors) jumping in, not out."

Bitcoin sank on Monday after website CoinMarketCap removed prices from South Korean exchanges, because coins were trading at a premium of about 30 per cent in Asia's fourth largest economy.

That created confusion and triggered a broad selloff among investors.

According to Coilhils.com, the price of Bitcoin dropped more than 4 per cent to 20.3 million won (S$25,304) after the minister's comments from early Thursday.

The local price still trades at over a 30 per cent premium compared to other countries.

Bitcoin was down more than 10 per cent on the Luxembourg-based Bitstamp at US$13,350 (S$17,804), after earlier dropping as low as US$13,120, its weakest since Jan 2.

An official at Coinone told Reuters that a few officials from the National Tax Service raided the company's office this week.

"Local police also have been investigating our company since last year, they think what we do is gambling," the official, who spoke on condition of anonymity, said and added that Coinone was cooperating with the investigation.

Bithumb, the second largest virtual currency operator in South Korea, was also raided by the tax authorities on Wednesday.

"We were asked by the tax officials to disclose paperwork and things yesterday," an official at Bithumb said, requesting anonymity due to the sensitivity of the issue.

South Korean financial authorities had previously said they are inspecting six local banks that offer virtual currency accounts to institutions, amid concerns the increasing use of such assets could lead to a surge in crime.</s>The price of bitcoin and other cryptocurrencies dropped significantly today off the back of ‘news’ that South Korea’s government might ban trading exchanges.

As ever in the world of crypto, the slightest ripple of information can be taken out of context, and that appears to be the case here.

Reuters reported comments from Korean Justice Minister Park Sang-ki who said claimed his ministry “is basically preparing a bill to ban cryptocurrency trading through exchanges” following “enough discussion” with a range of government agencies, including the finance ministry.

As Reuters itself points out, any draft legislation would require the approval of parliament which could takes months, if not years. Even if that were to happen, the timing seems off with local elections upcoming this year and bitcoin, ethereum and other coins hugely popular among young people in Korea.

Looking back just weeks, today’s quotes also fly in the face of previous comments from the government’s financial regulators, which had said that it plans to prevent minors, foreigners and institutions from owning and trading cryptocurrency.

Nonetheless, with Korea the world’s largest trader of bitcoin on a country basis, the scare was enough to spread fear and move the market. The price of bitcoin lowered to $13,126, according to Coindesk, that’s the lowest since December 30. The price later rebounded as context was added to the minister’s comments.

Exchanges themselves don’t seem to be too moved by the minister’s apparent intention. TechCrunch spoke to sources at two Korea-based exchanges both of whom dismissed the comments are politicking from one branch of the government.

TechCrunch understands that the government has been in contact with prominent exchanges to gather information, while — as reported by Reuters — it has visited some exchanges. According to Reuters, some visits were based on looking into the tax situation of exchanges which has led to suggestions that unregistered exchanges may be banned.

To sum the situation up, hours after Park Sang-ki’s comments, a representative of President Moon Jae-in told Korean media [link in Korean] that the Justice Ministry’s position does not reflect that of the entire government.

So — tl;dr — we’re no closer to knowing exactly what steps Korea will take to regulate bitcoin exchanges.</s>The South Korean government Thursday 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.

But later Thursday, South Korea’s presidential office said the ban on the country’s virtual coin exchanges had not yet been finalized.

“Justice Minister Park’s comments related to shutdown of cryptocurrency exchanges is one of the measures prepared by the Ministry of Justice, but it’s not a measure that has been finalized,” a spokesman told reporters in a text message.

Earlier on Thursday, the 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 justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” said Park at a press conference, according to the ministry’s press office.

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.

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 percent in midday trade to 18.3 million won ($17,064.53) after the minister’s comments. It still trades around a 30 percent premium compared to other countries.

Bitcoin was down more than 10 percent on the Luxembourg-based Bitstamp at $13,199, after earlier dropping as low as $13,120, its weakest since Jan. 2.

South Korea’s cryptocurrency-related shares were also hammered. Vidente and Omnitel, which are stakeholders of Bithumb, skidded by the daily trading limit of 30 percent each.

Park Nok-sun, a cryptocurrency analyst at NH Investment & Securities, said the herd behavior in South Korea’s virtual coin market has raised concerns.

Indeed, bitcoin’s 1,500 percent surge last year has stoked huge demand for cryptocurency in South Korea, drawing college students to housewives and sparking worries of a gambling addiction.

“Virtual coins trade at a hefty premium in South Korea, and that is herd behavior showing how strong demand is here,” Park said. “Some officials are pushing for stronger and stronger regulations because they only see more (investors) jumping in, not out.”

There are more than a dozen cryptocurrency exchanges in South Korea, according to Korea Blockchain Industry Association.

The proliferation of the virtual currency and the accompanying trading frenzy have raised eyebrows among regulators globally, though many central banks have refrained from supervising cryptocurrencies themselves.

The news on South Korea’s proposed ban came as authorities tightened their grip on some of the cryptocurrency exchanges.

The nation’s largest cryptocurrency exchanges like 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.

Some investors appeared to have taken preemptive action.

“I have already cashed most of mine (virtual coins) as I was aware that something was coming up in a couple of days,” said Eoh Kyung-hoon, a 23-year old investor.

Bitcoin sank on Monday after website CoinMarketCap removed prices from South Korean exchanges, because coins were trading at a premium of about 30 percent in Asia’s fourth largest economy. That created confusion and triggered a broad selloff among investors.

An official at Coinone told Reuters that a few officials from the National Tax Service raided the company’s office this week.

“Local police also have been investigating our company since last year, they think what we do is gambling,” the official, who spoke on condition of anonymity, said and added that Coinone was cooperating with the investigation.

Bithumb, the second largest virtual currency operator in South Korea, was also raided by the tax authorities on Wednesday.

“We were asked by the tax officials to disclose paperwork and things yesterday,” an official at Bithumb said, requesting anonymity due to the sensitivity of the issue.

The nation’s tax office and police declined to confirm whether they raided the local exchanges.

South Korean financial authorities had previously said they are inspecting six local banks that offer virtual currency accounts to institutions, amid concerns the increasing use of such assets could lead to a surge in crime.
The South Korean Ministry of Justice announces that it is a preparing a bill to ban cryptocurrency trading through exchanges.