Bitcoin Value Takes Hit After South Korea Bans Certain Exchanges
South Korea announced on Thursday that it could outright ban cryptocurrency exchange. Those statements sent Bitcoin and other cryptocurrencies into a dive just days after a massive blow late last week.
The South Korean government put forth legislation in order to regulate how traditional, conventional banks interacted with bitcoin and other potentially volatile cryptocurrencies. The proposed legislation would keep South Korean companies from providing settlement services for any transation involving cryptocurrency.
"The government had warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility," the South Korean government said in a statement, as reported by Reuters.
Shortly after the announcement was made, Bitcoin value dropped 8 percent to $14,200. Ethereum fell by 4 percent to $725, and Litecoin dropped a whopping 11 percent to $240.
With its rapidly skyrocketing popularity into the public consciousness, bitcoin is also becoming increasingly more volatile. Just days ago, bitcoin seemed to finally recover from its pre-Christmas nosedive after dropping nearly 40 percent. The fall was enough to halt trading at one of the world's biggest cryptocurrency exchange sites Coinbase.
Earlier this month, South Korea also proposed a set of rules to stop companies from selling bitcoin anonymously. The government noted that bitcoin conflicted with the country's "Know Your Customer" rules. (Various iterations of that rule exist at banks around the world and seek to prohibit money laundering schemes.)
Currently, China has been the only country to completely ban exchanging bitcoins. Chinese authorities made that decision earlier this year.
While South Korea isn't banning cryptocurrencies entirely, they're making their hesitancy very clear. A few months ago, the nation's government banned initial coin offerings (ICO) -- the process by which many cryptocurrencies get started.
“Raising funds through ICOs seem to be on the rise globally, and our assessment is that ICOs are increasing in South Korea as well,” the regulator said in a statement after a meeting with the finance ministry, the Bank of Korea and the National Tax Service.
Ripple Finds a Rhythm
The one hold-out, however, was Ripple. The cryptocurrency has remained suprisingly steady despite its market peers fluxuating consistenly for the last week. It even netted out a gain today of over 1 percent to nearly $1.45 per piece. That's a 20 percent boost within the week.
Ripple was a cryptocurrency made for banks and global money transfers, so it seems natural that it would survive a dip in value given its intended purpose. However, the real reasoning put forth by Fortune could be all because of Japan and not South Korea. Japan continues to welcome in cryptocurrencies, and reports surfaced earlier this month that Japanese and South Korean banks discovered that using Ripple to call internationally saves cost by 30 percent.
Another recent reason for Ripple to still be growing is that SBI Holdings, a Tokyo-based financial services group, said they'd be partnering with some of the world's biggest credit card providers. According to Fortune, this distributed ledger technology used in the partnerships "underpins cryptocurrencies like Bitcoin."
The bitcoin values mentioned in this story reflect the price bitcoin dropped to as a result of the South Korea decision. At the time of publication, the evaluation stands at $14,896.06.