SEOUL (Reuters) – South Korea&rsquo,s government said on Thursday it plans to verbod cryptocurrency trading, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil spil the nation&rsquo,s police and tax authorities raided local exchanges on alleged tax evasion.
The clampdown te South Korea, a crucial source of global request for cryptocurrency, came spil policymakers around the world struggled to regulate an asset whose value has skyrocketed overheen the last year.
Justice minister Park Sang-ki said the government wasgoed preparing a bill to geobsedeerd trading of the virtual currency on domestic exchanges.
&ldquo,There are excellent concerns regarding virtual currencies and the justice ministry is basically preparing a bill to verbod cryptocurrency trading through exchanges,&rdquo, Park told a news conference, according to the ministry&rsquo,s press office.
After the market&rsquo,s acute reaction to the announcement, the nation&rsquo,s Presidential office hours zometeen said a kerkban on the country&rsquo,s virtual coin exchanges had not yet bot finalised while it wasgoed one of the measures being considered.
A press official at the justice ministry said the proposed verbod on cryptocurrency trading wasgoed announced after &ldquo,enough discussion&rdquo, with other government agencies, including the nation&rsquo,s finance ministry and financial regulators.
Once a bill is drafted, legislation for an outright geobsedeerd of virtual coin trading will require a majority vote of the total 297 members of the National Assembly, a process that could take months or even years.
The government&rsquo,s raunchy stance triggered a selloff of the cryptocurrency on both local and offshore exchanges.
The local price of bitcoin plunged spil much spil 21 procent ter midday trade to Eighteen.Trio million won ($17,064.53) after the minister&rsquo,s comments. It still trades at around a 30 procent premium compared to other countries.
Bitcoin BTC=BTSP wasgoed down more than Ten procent on the Luxembourg-based Bitstamp at $13,199, after earlier pulling down spil low spil $13,120, its weakest since Jan. Two.
South Korea&rsquo,s cryptocurrency-related shares were also hammered. Vidente ( 121800.KQ ) and Omnitel ( 057680.KQ ), which are stakeholders of Bithumb, skidded by the daily trading limit of 30 procent each.
Once enforced, South Korea&rsquo,s kerkban &ldquo,will make trading difficult here, but not unlikely,&rdquo, said Mun Chong-hyun, chief analyst at EST Security.
&ldquo,Keen traders, especially hackers, will find it rough to metselspecie out their gains from virtual coin investments te Korea but they can go overseas, for example Japan,&rdquo, Mun said.
Park Nok-sun, a cryptocurrency analyst at NH Investment & Securities, said the herd behavior te South Korea&rsquo,s virtual coin market has raised concerns.
Indeed, bitcoin’s BTC=BTSP 1,500 procent surge last year has stoked meaty request for cryptocurency ter South Korea, drawing collegium students to housewives and sparking worries of a gambling addiction.
&ldquo,Some officials are pushing for stronger and stronger regulations because they only see more (investors) hopping te, not out,&rdquo, Park said.
By Thursday afternoon, the Justice Ministry&rsquo,s announcement had prompted more than 55,000 South Koreans to join a petition asking the presidential Blue House to halt the crackdown on the virtual currency, making the Blue House webstek intermittently unavailable due to powerful traffic, the webstek displayed.
There are more than a dozen cryptocurrency exchanges ter South Korea, according to Korea Blockchain Industry Association.
The proliferation of the virtual currency and the accompanying trading madness have raised eyebrows among regulators globally, however many central banks have refrained from supervising cryptocurrencies themselves.
The news of South Korea&rsquo,s proposed verbod came spil authorities tightened their houvast on some cryptocurrency exchanges.
The nation&rsquo,s largest cryptocurrency exchanges such spil Coinone and Bithumb were raided by police and tax agencies this week for alleged tax evasion. The raids go after moves by the finance ministry to identify ways to tax the market that has become spil big spil the nation&rsquo,s small-cap Kosdaq index te terms of daily trading volume.
Some investors appeared to have taken preemptive activity.
&ldquo,I have already cashed most of mine (virtual coins) spil I wasgoed aware that something wasgoed coming up te a duo of days,&rdquo, said Eoh Kyung-hoon, a 23-year old investor.
Bitcoin sank on Monday after webstek CoinMarketCap eliminated prices from South Korean exchanges, because coins were trading at a premium of about 30 procent te Asia&rsquo,s fourth-largest economy. That created confusion and triggered a broad selloff among investors.
An official at Coinone told Reuters that a few officials from the National Tax Service raided the company&rsquo,s office this week. The official, who spoke on condition of anonymity, said that Coinone wasgoed cooperating with the investigation.
Bithumb, the 2nd largest virtual currency technicus ter South Korea, wasgoed also raided by the tax authorities on Wednesday.
&ldquo,Wij were asked by the tax officials to disclose paperwork,&rdquo, an official at Bithumb said, requesting anonymity due to the sensitivity of the kwestie.
The nation&rsquo,s tax office and police declined to confirm whether they raided the local exchanges.
South Korean financial authorities had previously said they are studying six local banks that suggest virtual currency accounts to institutions, amid concerns the enhancing use of such assets could lead to a surge te crime.