South Korea’s justice minister said on Thursday that a bill is being prepared to ban all cryptocurrency trading in the country.
The market for digital coins was under intense pressure on Thursday morning amid reports that South Korea had a bill in the works to ban cryptocurrency trading.
That news is a major development for the cryptocurrency space, as 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, 5 percent of all bitcoin are traded against the won.
“There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” Park Sang-ki said at a press conference, according to the ministry’s press office.
“A few officials from the National Tax Service raided our office this week,” a representative of Coinone, a South Korean crypto exchange.
According to the Reuters report, South Korean authorities also were looking into Bithumb, another cryptocurrency exchange.
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 could take months — or even years.
Cryptocurrency trading in South Korea is very speculative and similar to gambling. Major cryptocurrencies like bitcoin and ethereum are priced significantly higher in the country’s exchanges than elsewhere in the world.
At the time of print, bitcoin was trading down more than 11% at $13,415 a coin, according to data from Markets Insider. In total, the entire cryptocurrency market was down more than $100 billion at $636 billion. It hit an all-time high of $830 billion earlier this month, according to data from CoinMarketCap.
It is learnt that regulators in South Korea were preparing a wide-ranging inspection on six commercial banks that manage “virtual” bitcoin accounts. Virtual accounts, are where investors can store fiat money when they buy or sell crypto.
Bitcoin tumbled more than 12 percent following Park’s remarks, before recovering. It was down 0.7 percent on the Coinbase exchange.
Ethereum tanked on the news and remained 7.6 percent lower on Coinbase.
Image Source: REUTERS/Kim Hong-Ji