South Korea to ban cryptocurrency trading amid fears of tax evasion

Cryptocurrencies Fall As South Korea Moves To Ban Crypto Trading

It still trades at around a 30 percent premium compared to other countries.

Ethereum, which is also very popular in South Korea, also dropped 14 percent on the news.

Digital currency prices wobbled Thursday after South Korea, a hotbed for currencies like bitcoin, said it will consider a trading ban.

"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", said Mun Chong-hyun, chief analyst at EST Security.

Earlier on January 11, Justice Minister Park stated that the Justice Ministry is drafting a bill that would effectively ban cryptocurrency trading for both foreigners and citizens.

Banks are prohibited from offering virtual accounts in South Korea because they are used to buy or sell cryptocurrencies to individual customers. "The government is examining how much to regulate virtual currency trading", said Jonh-ku.

Immediately after the statement of Justice Minister park was released, the Ministry of Strategy and Finance noted that it was only made aware of his statement through media reports and that it does not reflect the viewpoint of the government.

The dramatic market reaction led to the country's Presidential office to put out a statement saying that the ban on cryptocurrency trading had not been finalised and was still only being considered as a possible option.

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By 5pm Hong Kong time, it was trading at US$13,723.94, down 7.8 per cent.

With this news, many investors have started to sell the coins immediately. Moreover, it created confusion and gave rise to huge selloff among investors. Exchanges Bithumb and Coinone were raided by tax officials over the past two days and South Korean news services SBS says the country's crypto marketplace will be shut down.

The stock of Long Island Iced Tea Corp. soared last month after the company said it plans to change its name to Long Blockchain Corp.

According to industry website CryptoCompare, more than 10 percent of ethereum is traded against the South Korean won - the second largest concentration in terms of fiat currencies behind the dollar.

"We were asked by tax officials to disclose paperwork and things yesterday", an official at Bithumb told Reuters on the condition of anonymity.

Police have been investigating Coinone's margin-trading service since past year, according to an official who asked not to be named citing policy.

Meanwhile South Korean authorities are investigating six banks now offering virtual currency accounts that have possible links to money laundering.

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