South Korea Cools Talk Of Cryptocurrency Trading Ban
12 Janvier 2018 - 6:19AM
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South Korea's finance minister on Friday sought to calm the
cryptocurrency market after an announcement a day ago that the
country's justice ministry was planning a ban on crypto exchanges,
sending prices of digital currencies such as Bitcoin sharply
lower.
"The issue of shutting down exchanges, told by the justice
minister yesterday, is a proposal by the justice ministry and it
needs consultations among ministries," Finance Minister Kim
Dong-yeon said, the South Korean news agency Yonhap reported
Friday.
Justice Minister Park Sang-ki had said on Thursday that his
ministry was preparing legislation that bans any transactions based
on virtual currencies via exchanges due to grave concerns regarding
the excessive exuberance in the cryptocurrency market.
Following the news, the price of Bitcoin plunged as much as 14
percent to below $13,000, and over $100 billion was wiped out in
market capitalization. As of 4.37 am ET, Bitcoin was down 0.63
percent at $13,500 and Ethereum was lower by 4.01 percent at
$1,184.19, on coinbase.
The total market cap was $696.25 billion as of 4.35 am ET on
Friday versus $691.00 billion at the same time on Thursday.
The South Korean government has been voicing concerns for the
past several months over the cryptocurrency craze, as the currency
surge gained steam despite severe falls in between.
The country has witnessed intense interest in cryptocurrencies
such as Bitcoin with its citizens, both young and old, investing
heavily in these with the hope of making a quick profit.
South Korea hosts several crypto exchanges, but prices of
cryptocurrencies in the country tend to be much higher than
elsewhere, reportedly over 40 percent, as buyers exceed those
willing to sell. Such premium is called "Kimchi premium" in the
local media, in an allusion to the famous Korean dish of spicy
pickled cabbage.
The justice minister noted that foreign investors are
considering the Korean trade in virtual currencies as abnormal due
to the excessive prices relative to other markets across the
world.
Different Korean market regulators have initiated a joint effort
to curb the unbridled trading in cryptocurrencies. Authorities hope
that a shutdown of crytptocurrency exchanges would minimize side
effects of cryptocurrency trading such as fraud using
cryptocurrencies, cyber hacks on cryptocurrency exchanges, and
irrationally overheated speculation.
At the start of the week, South Korea's Financial Intelligence
Unit and Financial Services Commission had launched a probe into
six commercial banks, which were offering trading accounts to
crytpocurrency exchanges in the country.
The Bank of Korea has reportedly formed a task force to study
the impact of cryptocurrencies on the financial system.
"Cryptocurrencies are highly likely to be used as a means to
money laundering due to their nature of anonymity and
non-face-to-face transaction," the FSC had said.
Joint inspections were planned for Woori Bank, Kookmin Bank,
Shinhan Bank, NongHyup Bank, Industrial Bank of Korea and Korea
Development Bank from Monday through Thursday.
The Yonhap reported that Shinhan Bank, one of the main retail
banks, and the state-run Industrial Bank of Korea decided not to
offer anonymous cryptocurrency accounts for cryptocurrency
trading.
As the so-called "virtual accounts" offered to cryptocurrency
exchanges were making it more difficult to identify real names of
account holders, the country is implementing new rules that will
require real-name cryptocurrency transactions, starting January
20.
Tax authorities also visited leading digital currency exchanges,
Bithumb and Coinone, this week on concerns over tax evasion.
The number of accounts linked to cryptocurrency exchanges
totaled 111 with a combined deposit value estimated around 2
trillion won or $1.8 billion, Yonhap reported. More than 2 million
Koreans own digital currencies.
The country has sought deeper co-operation with regulators in
China and Japan in curbing intense speculation in
cryptocurrencies.
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