Bitcoin Price Crashes as South Korea Makes 'Strong Statement'
South Korea's Justice Minister announced on January 11 that the country is drafting a bill to completely ban cryptocurrency trading.
According to CNBC, this is considered a major development in the virtual currency market, because South Korea is one of the largest markets for digital currencies such as Bitcoin or Ethereum. Data from CryptoCompare shows that more than 10% of Ethereum transactions and 5% of Bitcoin transactions are currently in Korean Won.
"There are great concerns about virtual currencies and the Ministry of Justice is preparing a bill to ban all virtual currency trading on exchanges," Minister Park Sang-ki said at a press conference.
Cryptocurrency trading in South Korea is highly speculative and similar to gambling - Photo: Getty/CNBC.
The price of Bitcoin dropped nearly 10% after Mr. Park's statement. On Coinmarketcap.com at 11am Vietnam time, all top 10 largest virtual currencies in terms of capitalization plummeted. Of which, Ethereum decreased nearly 15% compared to 24 hours ago, Ripple decreased 17.2%.
Cryptocurrency trading in South Korea is highly speculative and similar to gambling. According to some assessments, cryptocurrency prices in South Korea are "unusual" because the prices of major cryptocurrencies such as Bitcoin are much higher in this country than in other countries around the world. Many traders call this price difference the "kimchi premium".
Bitcoin-related stocks on the South Korean stock market plummeted after the Justice Minister’s statement. For example, Omnitel, a Bitcoin remittance company, fell 30%, Digital Optics fell 13.5%, KPM Tech fell 5.2%, etc.
The news comes after South Korea's largest cryptocurrency exchanges were raided by tax authorities and police this week over suspected tax evasion, sources familiar with the matter told Reuters. Bithumb, South Korea's second-largest cryptocurrency exchange, said it was raided by authorities on Wednesday.
In recent days, the prices of virtual currencies have been falling continuously due to many negative news. Many major news agencies reported that China is considering "erasing" Bitcoin mining farms in this country. South Korea is increasingly strict with activities related to virtual currencies.
Meanwhile, legendary investor Warren Buffett told CNBC he is confident that "cryptocurrencies will come to a bad end."
