Bitcoin prices plunged on Thursday by almost 14 per cent, after South Korea intensified its crackdown on virtual currencies and considers a ban on all cryptocurrency trading in the country, one of the world's largest bitcoin markets.
"There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges".
Regardless, it takes time, potentially years, for the wheels of legislation to turn; the bill will require drafting, after which it will need to win a majority vote from the National Assembly before it could become a law. The website, CoinMarketCap removed prices of bitcoin from South Korean exchanges, as it was trading at a premium of 30 percent in the country. Some compare it to gambling which could attribute to South Korea's substantially higher exchange prices.
"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.
As of 4 p.m., Bitcoin was trading at 18.32 million won (US$17,097), down 18 percent from a day before, while other popular virtual coins like Ripple and Etherium tumbled nearly 25 percent.
Bitcoin spot prices were down 7.3% to $13,804.60, according to Coindesk.com. As the world's third largest digital currency, high demand has seen South Korean traders paying premiums of more than 40% over global rates for Bitcoin.More news: Golden Globes Opening Speech: Seth Meyers Tackles Kevin Spacey & Harvey Weinstein
Not only is there downward pressure on the markets, following news of the South Korean government looking to shut out cryptocurrency trading, but there's also the Coinbase announcement that has crippled Ripple going into the New Year. The Commodities Futures Trading Commission recently proposed regulating bitcoin as a commodity.
The government's announcement resulted in a selloff of the cryptocurrency on local as well exchanges overseas.
"Virtual currency is not based on an exchange of something with a certain value", he said.
More importantly, the South Korean cryptocurrency exchange market is processing a daily trading volume that is twice larger than the country's main stock market KOSDAQ.
We were asked by the tax officials to disclose paperwork and things yesterday.
Meanwhile South Korean authorities are investigating six banks now offering virtual currency accounts that have possible links to money laundering.