Amid growing concerns that lack of regulation will present too big a challenge to monitor and control the cryptocurrency, South Korea justice minister Park Sang-ki revealed in a statement yesterday that the plans are in the works to create a bill banning the cryptocurrency trading of any kind.
Though not going too far into detail, Sang-ki said in the press statement that “[t]here are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges.” A majority vote from the 297-member National Assembly is needed to turn the drafted bill into legislation, and the process could take anywhere from a few months to several years, depending on how contentious the issue is.
This news had a big impact on the market, as South Korea is home to one of the largest markets for the world's two best-performing cryptocurrencies, Bitcoin, and Ethereum, with some estimates that South Korea accounts on some days for 20% of the total global cryptocurrency market. Since the announcement was given, the market has witnessed a drop of more than 12 percent for Bitcoin as well as an 8 percent decline for Ethereum.
Bitcoin exposed stocks in the country took a major dive not long after the announcement: Omnitel fell by 30 percent, Vidente by 29.96 percent, Digital Optics dropped 13.7, and KPM Tech experienced a 5.48 percent loss. However, HK/SIN, the cryptocurrency price, fortunately, was able to recover somewhat from the loss to trade at $13,547.7.
Can the South Korean Government Tame Cryptocurrencies?
Though South Korea's a powerful trading hub, the public's involvement with cryptocurrency is quite speculative, in some cases akin to gambling. “Cryptocurrency speculation has been irrationally overheated in Korea. The government can't let this abnormal situation of speculation go on any longer,” the South Korean government shared in a statement. In fact, the government’s concerns had been quickly rising in 2017, culminating in a swift series of actions.
Beyond the speculation issue, most likely recent statements were partially motivated by the string of hacking operations that hit the Seoul-based cryptocurrency exchange Youbit last year, with the warning in a statement from December that cryptocurrencies could be “vulnerable to the damage from investment fraud or hacking attacks on exchanges,” with Prime Minister Lee Nak-yeon adding in a statement from December that if the speculative trend continues in the country, it could “lead to some serious distorted or pathological phenomenon.” Plans to form a task force to analyze the roots of the “cryptocurrency problem” were also announced earlier the same month.
$ICX falls as South Korea enforces harsh regulations on #cryptocurrency and raids exchanges all over the country.— XVGShill (@hsyedp) 11 Ocak 2018
Watch as South Korea floods the $XVG gates to restore their freedom.#Vergecurrency #VergeCoin #VergeFam #ICX #XVG pic.twitter.com/RExecqJHtn
2017 also closed with police raids on some of South Korea’s largest cryptocurrency exchanges as well as tax offices, with the government citing allegations of tax evasion. The move sparked outrage, and no doubt created a bigger gulf between traders and government. Though South Korea is attracting the most attention at the moment, in the future other countries will be forced to actively engage in this issue more and more, faced with a very tough dilemma: regulating a market that resists conventional regulatory models.
South Korea Ministry of Strategy & Finance only found out the Ministry of Justice's #cryptocurrency trading ban proposal through media reports.— Joseph Young (@iamjosephyoung) 11 Ocak 2018
MSF is upset because central bank, MSF, MoJ are in the same crypto task force. "Other members don't share the same viewpoint," MSF said
Recently, however, in a voice of dissent—complicating the issue even further. Kim Dong-yeon, Minister of Finance and Economy of the Ministry of Economy and Finance stating this week, “We do not share the same views as the Ministry of Justice on a potential cryptocurrency exchange ban.” Backing up this opinion, CCN reporter Joseph Young said in an official announcement, “South Korean government reaffirms there will be NO TRADING BAN for #cryptocurrency market in the short term and NOTHING IS FINALIZED.”