Ethereum dives as one of the world’s biggest cryptocurrency markets considers a bill to ban trading
South Korea’s justice minister said that the country is preparing a bill that will ban all cryptocurrency trading
Park Sang-ki told reporters that there are “great concerns” regarding virtual currencies
Bitcoin tumbled more than 12 percent following Park’s remarks before recovering.
Ethereum tanked on the news and is still down 11 percent on the Coinbase exchange.
That news is a major development for the cryptocurrency space, as South Korea is one of the biggest markets for major coins like bitcoin and ethereum.
According to industry website CryptoCompare, more than 10 percent of ethereum is traded against the South Korean won — the second largest concentration in terms of fiat currencies behind the dollar. Meanwhile, 5 percent of all bitcoin are traded against the won.
“There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” Park Sang-ki said at a press conference, according to the ministry’s press office.
Bitcoin tumbled more than 12 percent following Park’s remarks, before recovering. It was down 1.6 percent on the Coinbase exchange.
Park added that he couldn’t disclose more specific details about proposed shutdown of cryptocurrency trading exchanges in the country, adding that various government agencies would work together to implement several measures.
Later in the day, South Korea’s presidential office said that any potential bill “is not a measure that has been finalized,” according to News1, a South Korean news site.
Reuters further reported that a press official said the proposed ban on cryptocurrency trading was announced after “enough discussion” with other government agencies including the nation’s finance ministry and financial regulators.
The news wire later added that once a bill is drafted, legislation for an outright ban 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.
Cryptocurrency trading in South Korea is very speculative and similar to gambling. Major cryptocurrencies like bitcoin and ethereum are priced significantly higher in the country’s exchanges than elsewhere in the world. For example, bitcoin traded at $17,169.65 per token at local exchange Bithumb, which was a 31 percent premium to the CoinDesk average price.
That difference in price is called a “kimchi premium” by many traders.
In fact, earlier this week, industry data provider CoinMarketCap tweeted that it would exclude some South Korean exchanges in price calculations due to the “extreme divergence in prices from the rest of the world” and for “limited arbitrage opportunity.” The exchanges that were removed from the price calculation included Bithumb, Korbit and Coinone.