S. KOREAN LAWMEN RAID VIRTUAL COIN EXCHANGES; TRADING BAN PLANNED
SEOUL— South Korean police and tax authorities raided local cryptocurrency exchanges on allegations of tax evasion as the government announced plans to ban trading of virtual coins.
The clampdown in South Korea, a crucial source of global demand for cryptocurrency, sent cryptocurrency prices plummeting.
“There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” said Justice Minister Park Sang-ki.
A press official said the proposed ban on cryptocurrency trading was announced after “enough discussion” among government agencies, including the finance ministry and financial regulators.
Majority vote
Once a bill is drafted, legislation for a ban will require a majority vote of the 297 members of the National Assembly, a process that could take months or even years.
The government’s tough stance triggered a sell-off of the cryptocurrency on both local and offshore exchanges.
South Korea’s cryptocurrency-related shares were also hammered.
Vidente and Omnitel, which are stakeholders of Bithumb, skidded by the daily trading limit of 30 percent each.
Once enforced, South Korea’s ban “will make trading difficult here, but not impossible,” said Mun Chong-hyun, chief analyst at EST Security.
“Keen traders, especially hackers, will find it tough to cash out their gains from virtual coin investments in Korea but they can go overseas, for example Japan,” Mun said.
By Thursday afternoon, more than 55,000 South Koreans joined a petition asking the presidential Blue House to halt the crackdown.
Regulatory puzzle
There are more than a dozen cryptocurrency exchanges in South Korea, according to Korea Blockchain Industry Association.
The proliferation of virtual currency and the accompanying trading frenzy have raised eyebrows among regulators globally, though many central banks have refrained from regulation.
The news on South Korea’s proposed ban came as authorities tightened their grip on some of the cryptocurrency exchanges.
Raids
The nation’s largest cryptocurrency exchanges, like Coinone and Bithumb, were raided by police and tax agencies this week for alleged tax evasion.
The raids follow moves by the finance ministry to identify ways to tax the market that has become as big as the nation’s small-cap Kosdaq index in terms of daily trading volume.
Bitcoin sank on Monday after website CoinMarketCap removed prices from South Korean exchanges, because coins were trading at a premium of about 30 percent in Asia’s fourth largest economy.
That created confusion and triggered a broad sell-off among investors.—