A huge volatility and sell-off have recently gripped the cryptocurrency market majorly due to a lot of uncertainty over South Korean government’s decision to control and regulate cryptocurrency trading in the country. In an attempt to curb the extreme craze about cryptocurrency trading among Korean investors sighting issues of money laundering and tax evasion, the government officials are seen performing thorough checks on exchanges and the user accounts registered with them.
Earlier today, on January 11, we along with several mainstream media like CNBC and Reuters reported about South Korea planning to ban cryptocurrency trading activities in the country. The report showed that the South Korean Justice Department is preparing a legislation to introduce a ban on cryptocurrency trading exchanges in the country. In a statement earlier today, 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.”
Following this news, the market was gripped by panic and uncertainty with a huge sell-off followed later with the price of Bitcoin and Ethereum taking a major dive. Moreover, today’s earlier report also suggested that this decision of imposing a ban was taken after “enough discussion” in tandem with South Korea’s Ministry of Finance and Ministry of Strategy. Both of these ministries are considered to be the major members of the cryptocurrency regulation task force. When this news of a possible ban came to the ministries’ notice, both of them outrightly rejected it calling it premature.
During a press conference later in the day, both the ministries told local reporters that they heard about a possibility of cryptocurrency trading ban, which was communicated by the Ministry of Justice through media reports. for the first time. The ministries then clarified that they do not agree to the proposal. “We do not share the same views as the Ministry of Justice on a potential cryptocurrency exchange ban,” MSF said.
South Korea Ministry of Strategy & Finance only found out the Ministry of Justice's #cryptocurrency trading ban proposal through media reports.
MSF is upset because central bank, MSF, MoJ are in the same crypto task force. "Other members don't share the same viewpoint," MSF said
— Joseph Young (@iamjosephyoung) January 11, 2018
Moreover, later Reuters also reported that the Presidential Office of South Korea said that a ban on cryptocurrency exchanges was not yet finalized. A spokesperson from the office was quoted saying:
“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.”
Reuters also reported that if the proposal is approved, the legislation will take a lot of time to come into effect:
“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.”
However, there is no denying of the fact that the government bodies have intensified their crackdown on crypto exchanges. The offices of two major Korean exchanges Bithumb and Coinone were raided by government tax officials and police yesterday and today. A Coinone employee told Reuters:
“Local police also have been investigating our company since last year, they think what we do is gambling.”
Another word in the market is that South Korea’s central bank – Bank of Korea has recently launched a cryptocurrency task force to understand and study the impact of this new decentralized form of currency trading on the country’s financial system. Local news agency Pulse News has reported that the task force has been working in coordination with eight other departments including the financial stability and monetary policy units in order to study the impact of cryptocurrencies.