News of a bitcoin crackdown in South Korea sent the
market for digital coins into a tailspin Thursday
Reuters reported a day earlier that South Korea has a
bill in the works to shut crypto trading.
Bitcoin, the largest cryptocurrency, was trading down
more than 9% at last check.
The market for digital coins was under intense pressure Thursday
morning amid reports that South Korea has a bill in the works to
ban cryptocurrency trading.
“South Korea’s justice minister said on Thursday the ministry is
preparing a bill to ban cryptocurrency trading through its
exchanges,” Reuters reported.
That news was on the heels of a report that authorities were
raiding cryptocurrency exchanges in the country.
“A few officials from the National Tax Service raided our office
this week,” a representative of Coinone, a South Korean crypto
According to the Reuters report, South Korean authorities also
were looking into Bithumb, another cryptocurrency exchange.
At the time of writing, bitcoin was trading down more than 9% at
$13,458 a coin, according to data from Markets Insider. At one
point, the entire cryptocurrency market was down more than $100
billion at $636 billion. It hit an all-time high of $830 billion
earlier this month, according to data from CoinMarketCap.
Still, some cryptocurrency enthusiasts saw the move as a positive
sign for the market.
“If the Korean government takes a similarly aggressive stance to
crypto exchanges as was taken in China, then we can likely expect
to see a number of the major exchanges move to jurisdictions that
have a clearer regulations,” Sebastian Quinn-Watson, an executive
at Blockchain Global, told Business Insider.
began their own crack down on cryptocurrency exchanges in
2017. It was a move investors shook off after an intense
“Japan is the likely beneficiary of this move,” Quinn-Watson
added. “End point, high quality, well-run exchanges will thrive
and poorly-run exchanges will perish and the consumer and market
South Korea has been a hot market for cryptocurrencies. Bitcoin,
for instance, has traded at a more than 40% premium on exchanges
in the country relative to US exchanges. According to Josiah
Hernandez, chief strategy officer at Coinsource, that demand will
make it hard for regulators to follow through on a full ban.
“Even with massive discounts applied to account for margin
trading, exchange volumes indicate meaningful underlying
retail demand for bitcoin,” Hernandez said. “It’s doubtful
that’s going to just disappear.”
Still, notable Wall Streeters such as JPMorgan chief
executive Jamie Dimon have said governments would be
bitcoin’s main impediment.
“The other thing I’ve always [said] about bitcoin,
governments — and this is not a technological statement —
governments are going to crush it one day,” Dimon said of
bitcoin. “Governments like to know where the money is, who
has it and what you’re doing with it, in case you haven’t
Dimon famously called bitcoin “a fraud” in September, but
stepped away from those remarks Tuesday.
The news of the crackdown follows a Wall Street Journal report
Monday that regulators in South Korea
were preparing a wide-ranging inspection on six commercial
banks that manage “virtual” bitcoin accounts. Virtual accounts,
according to The Journal, are where investors can store fiat
money when they buy or sell crypto.
“There is growing concern that banks, which should actively act
as gatekeepers to prevent the distribution of crime and illegal
funds, are aiding and encouraging them,” Choi Jong-ku, head of
South Korea’s Financial Services Commission, said.