South Korean authorities keep curbing bitcoin trading. After banning the registration of novel virtual account services for crypto exchanges and demanding identification of all the account holders, the country is taking on a bill, which will prohibit digital money trading on exchanges.
Meanwhile, bitcoin is going through the downfall. On Monday, January 8 BTC’s price sharply fell to $14,200 when prices of a range of other most known cryptocurrencies experienced the drop. The Wall Street Journal named an obvious reason for such a phenomenon: website Coinmarketcap.com purged data from some South Korean exchanges. Thus, website’s price quotes for a group of digital coins, e.g., bitcoin, Ripple, and Ethereum, changed.
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At the moment, bitcoin is experiencing another wave of the drop. On January 11 in the afternoon, the father of all cryptocurrencies plunged to $12,845, falling by 14% amid the news about South Korea planning the bill.
New Bill To Come: South Korea Strengthening The Hold on BTC Trading
The South Korean government’s crusade of suppressing cryptocurrencies in the country, which are very popular among citizens, is ongoing. The bill, aimed at disabling crypto trading in the country, is being worked on, according to the country’s justice minister Park Sang-ki, The Financial Times reported.
“There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” explained Park Sang-ki.
In scope, the South Korean digital money trading market is the third massive one around the globe but it will vanish if the country’s National Assembly passes the ban document. Crypto enthusiasts started attacking the government with messages, rebelling against the potential taboo. However, as the Blue House chief press secretary Yoon Young-chan accentuated, the decision concerning the bill is not the full and final conclusion.
The press secretary added that before the final decision, there will be a discussion between all governmental branches, as Yonhap informed.
What’s The Matter?
In the past few weeks, South Korea notified about its regulatory measures, which could restrict the crypto market. For example, it prohibited the trading of bitcoin-based futures and the use of unidentified virtual currency accounts. Since then citizens above 19 years old, foreigners and local financial establishments are not allowed to pile into cryptos.
The government also keeps an eye on six South Korean banks which provide institutions with digital currency accounts as they may not stick to the rules which prevent money laundering and might not use real names for these accounts. This followed the last December claim of the central bank head, who said the digital coins trading had been speculative.
Moreover, South Korea turned to International Monetary Fund, the European Commission, and 10 other international organizations as well as to 23 nations with the call for collaboration in regulating global cryptocurrency trading.
The popularity of crypto trading in South Korea has also led to the following consequences:
- traders started disbursing 40% premiums on top of international rates for BTC
- the authorities have become worried that ordinary buyers could be exploited this way
For example, South Korean justice minister Park Sang-ki believes that bitcoin and its ilks’ trading can be compared to gambling and even speculation. Therefore, the nation may suffer because of the financial lesion. The country’s officials are also skeptical because they assume bitcoin craze may end up with the burst of the economic bubble.
Main Exchanges At Gunpoint
Besides, earlier on January 11, the representatives of the country’s tax department raided Coinone and Bithumb, which are the South Korean top crypto exchanges. The spokesperson of the first one claimed that the tax agents enquired about Coinone sales, crypto trading volume, and some information regarding corporate tax payment.
“Police see this as gambling and local authorities have also advised us to stop the service as they think it fuels the market frenzy,” explained the Coinone’s representative.
Important to mention, this South Korean crypto exchange has been investigated by the country’s law enforcement agencies since the end of December 2017. According to FT, the subject of the probe is the exchange’s special margin trading service, which lets the traders short virtual money. In the mid-December the exchange pulled up the service, listening up to the authorities’ recommendation, even though Coinone claimed it is lawful. Some other crypto exchanges in the country had to follow the same steps.
Forbidden Fruit is Much Sweeter
Notwithstanding the above, some experts in the field believe that the more the government restricts virtual money, the more ordinary buyers and investors will value it. This will happen due to the fact that South Korean citizens will be limited in access to bitcoin and its brethren. Therefore, their price may skyrocket. Such an opinion expressed the analyst at DB Financial Investment, Moon Hong-chul:
“The regulatory moves could actually boost the scarcity value of virtual currencies and fuel demand further.”
Charts Source: Coindesk.com