According to CNBC, over $106 billion of value was wiped off the global cryptocurrency market on Thursday following news that South Korea may be preparing a band on all cryptocurrency trading.
The country’s justice minister, Park Sang-ki made comments in a press conference on 11 January that the government was “basically preparing a bill to ban cryptocurrency trading through exchanges”.
Legislation putting the ban into force will be subject to a vote in South Korea’s National Assembly. The news follows the news that the country’s ban on cryptocurrency exchanges from opening new customer accounts in December 2017, and the incoming ban on anonymous accounts.
The statements sent shockwaves through the crypto markets. The Telegraph is reporting that the local price of Bitocin collapsed by 21% in midday trading. The digital currency was down 10% at around £13,150 on the Luxembourg-based Bitstamp.
According to Coinmarketcap at 7:30 London time, Bitcoin was down around 6% while Ethereum and Ripple had taken a 11% and 9% hit respectively.
The dramatic market reaction led to the country’s Presidential office to put out a statement saying that the ban on cryptocurrency trading had not been finalised and was still only being considered as a possible option.
Leading cryptocurrency exchanges in South Korea have also been raided by local tax authorities. The Financial Times reports that Bithumb and Coinone have confirmed that officials from the National Tax Service have visited their offices and demanded information on their trading activities.
A Coinone spokesperson is quoted as saying:
“They asked for some data such as cryptocurrency trading volume, our exchange’s sales and whether we are paying corporate tax well.”
The visits are related to the country’s proposal to begin taxing capital gains from cryptocurrency trading. As the world’s third largest digital currency, high demand has seen South Korean traders paying premiums of more than 40% over international rates for Bitcoin.