South Korea follows China in cracking down on Bitcoin… and is considering a ban (again)

Update: Well, this is confusing. A week after issuing a clarification to Park Sang-ki’s statement that used the phrase “ban cryptocurrency,” and insisting regulation rather than an all-out ban was on the table, the South Korean government seems to be pulling another 180-degree turn, making this a full 360.

South Korea follows China in cracking down on Bitcoin... and is considering a ban (again)

Today, South Korea’s chief of the Financial Services Commission said: “(The government) is considering both shutting down all local virtual currency exchanges or just the ones who have been violating the law.” On top of that, at a news conference the Bank of Korea’s governor Lee Ju-yeol said: “cryptocurrency is not a legal currency and is not being used as such as of now.”

This goes completely against the announcement a week ago when the plan was merely to regulate cryptocurrency exchanges. Previously, it was suggested that exchanges needed to meet six requirements in order to operate:

  • Account owners’ real names will have to be verified
  • Users will need to submit proof of income
  • Exchanges must have face-to-face interviews to meet “Know Your Customer” policies
  • Cryptographic keys must be provided to establish anti-money laundering systems
  • Fiat accounts must be kept separate
  • Exchanges should provide investment warnings

Like China, a ban on initial coin offerings (ICO) would remain in place. Now? It’s not clear what’s happening, but it’s no wonder the price of Bitcoin is even more volatile than usual.

The original article continues below

For those riding the Bitcoin rollercoaster, hold onto your hats: things are about to become even more choppy. On Thursday, South Korea announced plans to ban the sale of cryptocurrencies through its exchanges, with the justice minister Park Sang-ki announcing that they were giving the government “great concern.”

“There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” Park said at a press conference.

READ NEXT: What is cryptocurrency?

The announcement follows reports that several Seoul cryptocurrency exchanges were recently raided in relation to a tax evasion probe. One official from Bithumb – South Korea’s second-largest Bitcoin exchange – confirmed this to Reuters, saying: “We were asked by the tax officials to disclose paperwork and things yesterday.”

Unlike the raids on currency exchanges, a ban on their operation isn’t something that can happen overnight. A bill would need to be written, then tabled before it can be voted on by the country’s National Assembly. The legislation would require a majority of the 297 members for a ban to occur – and that process could end up taking months or even years.

READ NEXT: How to buy Bitcoin in the UK

Still, the legislative delay hasn’t stopped the price of Bitcoin fluctuating even more wildly than usual, dropping 10% of its value overnight. That kind of jump would typically spook investors, but if that kind of volatility alarms you, then it’s safe to say you haven’t been paying too much attention to cryptocurrencies this year. Indeed, when China moved to ban initial coin offerings back in September, people feared the end for Bitcoin when it dropped 40% from $5,000 to $2,972 overnight. Suffice it to say, that now feels like a blip, barely visible in this Coinbase chart of the last 365 days:south_korea_bans_bitcoin_exchanges

Which isn’t to say that the growth is sustainable or that the doomsayers are wrong – just that Bitcoin has been written off before when prices begin to stumble, before confounding the critics by surging again. This time last year, one Bitcoin was worth £676 – it’s now worth £10,554. Where we’ll be in January 2019 – who knows?

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