Bitcoin slumped as South Korea’s justice ministry reiterated a proposed ban on cryptocurrency venues, fuelling concern that a government crackdown will erode one of the world’s biggest sources of demand for digital currencies.
The ministry is preparing a bill that would outlaw cryptocurrency trading via exchanges, justice minister Park Sang-ki told reporters today. The government disclosed a similar plan on 28 December. Separately, one of Korea’s biggest cryptocurrency exchanges, Bithumb, said it met briefly with tax officials on Wednesday. The exchange denied a Reuters report that its offices had been raided.
Bitcoin dropped 10% to US$12 986.41 at 12.36pm Hong Kong time, extending its decline from last month’s high to more than 30%. Ripple fell 21% and ethereum slumped 8.7%.
“For the last few months, the Korean government has been making it very clear they want to bring this speculative activity under control and this isn’t really too much of a surprise,” said Thomas Glucksmann, Hong Kong-based head of APAC business development with cryptocurrency exchange Gatecoin. “This short dip in price is really an immediate reaction to this news.”
Some investors may also be reacting to China’s crackdown on bitcoin mining operations, he said.
Governments around the world are increasing scrutiny of cryptocurrencies as surging prices attract everyone from individual investors to Wall Street banks. Korea has emerged as something of a ground zero for the speculative frenzy, with the nation’s prime minister warning recently that the boom might corrupt the nation’s youth.
The US senate will hold a hearing with the country’s top markets regulators to discuss risks posed by cryptocurrencies such as bitcoin, Reuters reported, citing an unidentified person with direct knowledge of matter. — Reported by Eric Lam and Shinhye Kang, with assistance from Kyungji Cho, (c) 2018 Bloomberg LP