Cryptocurrency trading set to be banned in South Korea

12 January, 2018, 03:35 | Author: Darren Santiago
  • Bitcoin Cash

The nation's largest cryptocurrency exchanges such as Coinone and Bithumb were raided by police and tax agencies this week for alleged tax evasion.

South Korea is an important market to digital currencies with demand as high as 30% depending on the cryptocurrency in question according to CNBC and they trade at a premium to other countries.

The country's Justice minister Park Sang-ki said the country is preparing a ban on cryptocurrency trading, Reuters reported Thursday.

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. There are now about 20 virtual currency exchanges in the country, with the monthly turnover of the top bourse at 56 trillion won (US$52.2 billion) as of December.

Following the market's reaction to the government announcement, the nation's Presidential office later said that a ban on the country's virtual coin exchanges was not finalized, although it was being discussed.

His remarks sent bitcoin prices plunging 18 percent on South Korean exchange Bithumb, while ethereum slumped 23 percent. Reuters reports that the local price dropped by 21 per cent at midday trading following Park's comments, and according to BBC News the global price fell by seven per cent. The upcoming ban comes as China is trying to close down all bitcoin mining across the country in the wake of Beijing's own ban on digital currency trading.

It has also warned most cryptocurrencies were being traded in South Korea at far higher prices than elsewhere in the world, blaming factors including "blind speculation".

He pointed to the high premium on digital currencies in the South Korean market, saying that observers overseas have concluded such trading activities are abnormal. "Some officials are pushing for stronger and stronger regulations because they only see more (investors) jumping in, not out".

We were asked by the tax officials to disclose paperwork and things yesterday.

The stock of Long Island Iced Tea Corp. soared last month after the company said it plans to change its name to Long Blockchain Corp.

Two people read tables displayed at Bithumb, the largest cryptocurrency exchange in South Korea, in central Seoul on January 11, 2018. Police raids on exchanges also follow earlier statements from regulators that they may tax capital gains from crypto trading.

On the same day financial authorities inspected six local banks that offered virtual accounts for corporate customers.

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