The cryptocurrency market is currently in free fall as investors respond to news of a potential cryptocurrency crackdown. Bitcoin, Ripple, Ethereum, and Litecoin have fallen as much as 17% in the last 24 hours as panicked investors respond.
While the market may be in a nose dive, there is currently no definitive indicator that a ban will be enforced. Contrary to statements made earlier this week by Park Sang-ki, the head of the Justice Ministry, the South Korean government will not be imposing a trading ban on cryptocurrency in the short term.
The South Korean cryptocurrency market was rocked earlier this week by official statements made by Justice Minister Park during a January 11th press conference. The announcement, which heralded the creation of an inter-governmental bill banning the trade of cryptocurrency, caused the price of Bitcoin in South Korea to plummet by more than $2,000.
In a series of statements, Park noted that domestic exchanges would be the primary target of the bill. “There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges.”
The South Korean Ministry of Strategy and Finance issued a statement immediately after Justice Minister Park’s comments, however, highlighting the fact that Park’s viewpoints do not reflect those held by the Government. The South Korean Presidential office has also announced that any such ban has not yet been finalized.
South Korean Crypto Crackdown Imminent
Despite the claims made by the South Korean government that it will not be enforcing any cryptocurrency ban in the short term, the announcement made by Justice Minister Park follows a series of raids performed by police and tax authorities on domestic exchanges.
A regulatory crackdown appears to be underway in South Korea, where cryptocurrencies commonly trade at a 30% premium compared to the international market. The speculative mania of the South Korean market appears to have captured the attention of regulatory bodies, resulting in exchanges such as Bithumb and Coinone targeted during raids under the pretext of tax evasion investigation.
The South Korean government has adopted a hardline approach to cryptocurrency regulation over the last year- in September, the South Korean Financial Services Commission banned ICOs. Later, in December, the government proposed legislation that would limit the extent to which traditional financial institutions are able to interact with cryptocurrency platforms.
If Justice Minister Park’s proposed bill is drafted it would require a majority vote from the 297 members of the South Korean National Assembly, which could potentially take several months to achieve. Any such move by the South Korean government would be financially disastrous, however— the South Korean crypto market currently process a daily volume twice that of KOSDAQ, the country’s primary stock market.
The Ministry of Strategy and Finance, along with the South Korean Central Bank, have maintained the perspective that the cryptocurrency revolution cannot be controlled through an outright ban and must be approached through practical policies. With Minister Park’s comments, however, it’s possible that stringent regulation could be looming just over the horizon.
Feature Image via BigStock.