The cryptocurrency market took a hammering on Thursday, following news that South Korea could be preparing a trading ban. Over $100 billion were wiped off the cryptocurrency aggregate market cap, leaving most coins in the red. The market has since pared some of the losses.
South Korean Justice minister Park Sang-ki said the country’s government is preparing a bill to ban cryptocurrency trading on domestic exchanges.
“There are great concerns regarding virtual currencies and the Justice Ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” Park said at a press conference held on Thursday.
Park did not give any concrete details about the proposed South Korea ban.
Per Reuters, a Ministry of Justice press official said the South Korea ban on cryptocurrency trading was announced after “enough discussion” with other government agencies, including the nation’s Finance Ministry and financial regulators.
The South Korean Ministry of Strategy and Finance, Kim Dong-yeon, has since disputed the claims. In a press conference, the official said he had first heard of the Ministry of Justice’s cryptocurrency trading ban through media reports. According to the country’s Finance minister, the proposed South Korea ban on cryptocurrencies was announced without proper prior notice or consensus.
Other high-ranked officials within the Ministry of Finance believe the cryptocurrency sector should in fact be deregulated in the country, and South Korea should actively work towards raising the industry.
Once the bill is drafted, legislation for a South Korea ban on cryptocurrency trading would require a majority vote of the total 297 members of the National Assembly. The process could take months or even years.
If enforced, the South Korea ban “will make trading difficult, but not impossible,” said Mun Chong-hyun, chief analyst at EST Security.
Furthermore, the ban would obstruct National Tax Service (NTS) plans to impose taxes on cryptocurrency trading in the country.
By Thursday afternoon, more than 55,000 South Koreans had signed a petition asking authorities to halt the crackdown.
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Following the news, the aggregate cryptocurrency market cap suffered losses of over $100 billion. The market has since started to recover. At press time, bitcoin (BTC) was down 0.86% on the day against the dollar, and ether (ETH), ripple (XRP) and other major coins were still in the red.
South Korea is one of the major cryptocurrency trading markets, and coins are often traded at a premium in the country. Earlier this week, CoinMarketCap removed South Korean exchanges from the way it calculates the prices of cryptocurrencies, citing “extreme divergence in prices from the rest of the world.”
South Korea ban on cryptocurrencies – Image source: Yahoo Finance