South Korean authorities said an outright ban on cryptocurrency exchanges in the country would need to be a coordinated decision.
Amid a flurry of speculation and commentary of a ban, South Korean politicians are trying to clarify the country’s stance on its cryptocurrency market.
Major cryptocurrencies like bitcoin and ethereum took a beating on Thursday (11 January) following comments from the South Korean Minister for Justice Park Sang-Ki, who said his ministry was “basically preparing a bill to ban cryptocurrency trading through exchanges”.
Authorities in South Korea taking next steps
The South Korean minister for finance Kim Dong-yeon told reporters that all ministries within the administration would need to agree on the appropriate government response to an “overheating cryptocurrency speculation and for a degree of regulation”, according to Yonhap news agency.
CNBC reported more than $106bn of value was stripped from the entire cryptocurrency market compared to the beginning of that same day following the minister’s remarks.
Kim explained more discussions were required to provide a cohesive response as a government and added that a level-headed outlook is required due to the relevance and value of blockchain technology in industries like logistics and security.
The chief press secretary reiterated Kim’s statement regarding the requirement for the matter to be discussed further, with finalisation to be coordinated by all relevant government ministries.
Raids or visits?
South Korean authorities visited cryptocurrency exchanges as many worried the technology was being used for tax evasion last week, according to Wired.
While many report the police raided the exchanges, a different story was offered by CoinJournal, which said the visits were “unannounced interviews” carried out by financial authorities as opposed to law enforcement.
The process of banning cryptocurrency trading is one that could take years, with many speculating the country will ban institutions, minors and non-South Korean nationals from trading and owning digital currencies.
In order to pursue an outright ban on trading, a bill would need to pass the South Korean national assembly, a project that could take months or even years.
Regulators taking an interest
Dave Chapman, managing director at Octagon Strategy commodities and digital assets trading house in Hong Kong, told CNBC’s Squawk Box that regulators were simply scrutinising the market: “From a regulator’s perspective, they are trying to do the right thing. It’s about consumer protection and given that the heightened sort of fever in this asset class, it is right that they’re looking into this further.”
South Korea’s cryptocurrency market is more speculative than elsewhere in the world, with notably higher prices.
Both South Korea and China last year took action to ban Inital Coin Offerings or ICOs from their respective countries.