S. Korea considers trading ban and digital currencies tumble

S. Korea considers trading ban and digital currencies tumble

S. Korea considers trading ban and digital currencies tumble

The most recent news hitting major cryptocurrencies including bitcoin, ripple and ethereum was the South Korean government's plan to bring a bill that would ban trading in digital currencies.

Authorities had "grave concerns" over the craze and were "aiming to close virtual currency exchanges" in the country, he said.

The clampdown on virtual currencies in South Korea comes as the police raided Coinone and Bithumb, two of the largest cryptocurrency exchanges in South Korea on suspicion of tax evasion.

An official at the Financial Supervisory Service, South Korea's top financial regulator, said the closure of local exchanges represented a "very strong measure" against virtual coins.

Later in December, a ban was placed on anonymous cryptocurrency trading accounts, a measure that was meant to reduce the use of crypto for illicit purposes and instances of minors trading on crypto exchanges. They tweeted saying the reasons were "extreme divergence in prices from the rest of the world" and "limited arbitrage opportunity".

Bitcoin plunged after South Korea, the cryptocurrency's largest market, said it's working on a bill to ban cryptocurrency trading.

Cryptocurrencies rapidly reversed course, with bitcoin climbing back to trade just 6.5 percent down, and ethereum off 12 percent.

Park Nok-sun, a cryptocurrency analyst at NH Investment & Securities, said the herd behaviour in South Korea's virtual coin market has raised concerns.

Disclosure: The author owns small amounts of cryptocurrency, including bitcoin. The news follows the news that the country's ban on cryptocurrency exchanges from opening new customer accounts in December 2017, and the incoming ban on anonymous accounts.

It remains to be seen exactly what additional regulation will be enforced upon South Korean crypto traders but, if anything, it is a reminder how misleading statements taken out of context can easily affect the cryptocurrency markets.

The finance ministry is trying to find ways to tax the crypto market, which has become as big as the small-cap Kosdaq index in the country in terms of daily trading volume.

Earlier this week, South Korean authorities begun inspecting six banks to check wether they were requiring real names for accounts and following rules against money laundering. The later news from South Korea came a day after billionaire investor Warren Buffett stated that he would never invest in Bitcoin or other cryptocurrencies, and predicted the wildly popular assets are in for a fall.

"I can say nearly with certainty that cryptocurrencies will come to a bad end", Buffett told CNBC in an interview.

Related news