South Korea wants to ban cryptocurrencies
South Korea officials announced today (11.01.17) that they’re preparing a bill that will completely ban domestic cryptocurrency trading. The move comes after the prices of Bitcoin and other top digital currencies were priced higher in South Korean exchanges compared to the rest of the world. The minister’s comments to reporters on Thursday were later downplayed by a spokesman for President Moon Jae-in, who said the proposal is one among several and that nothing has been finalized. As you already know, korea’s government unveiled multiple options for cryptocurrency exchange regulation on Dec. 28, including allowing venues to operate under tighter supervision.
“There are great concerns regarding virtual currencies,” explained justice minister Park Sang-ki, at a news conference attended by Reuters.
Korea’s prime minister has said that cryptocurrencies might corrupt the nation’s youth, while the government warned in December that it would be conducting on-site investigations of exchanges. As we know, the finance ministry is studying a cryptocurrency tax. As reported by Reuters, a press official said that authorities have arrived at the decision of ban after enough discussions with several government agencies along with the financial regulators and Korea’s finance ministry!
“There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” justice minister Park Sang-ki told a news conference, according to the ministry’s press office.
Ban crypto or Exchanges?
Announcements about banning are not clear and we do not know what exactly is to be banned. But there is still hope because the ban may not happen right away, if at all. A few hours after the officials’ announcement of a planned ban, the South Korean presidential office clarified later that the ban had not been finalized yet. If a bill is drafted, it would still require a majority vote from the 297 members of the National Assembly, which could take months.
One of Korea’s biggest digital currency venues, Bithumb, said that it met briefly with tax officials this week. The exchange disputed a Reuters report that its offices had been raided by tax and police agents. When contacted by Bloomberg, Korea’s tax authority said it doesn’t comment on investigations due to privacy laws.
It is worth mentioning that South Korea banned initial coin offerings, and then in December, the government proposed legislation that would limit how traditional banks would interact with cryptocurrency. In its statement from December, the government hinted at the idea of an outright ban of crypto exchanges. At the time, China was the only country to have banned Exchanges, and it was only with the heavily monitored Chinese Firewall that it was able to do so.
Underground exchanges in South Korea?
The news of South Korea’s proposed ban came as authorities tightened their grip on some cryptocurrency exchanges. As everyone knows, there are always underground exchanges and over-the-counter platforms. So people will probably convert their money into bitcoin there, and then start trading offshore. However, things are not going well because it’s also a multi-pronged effort to police cryptocurrency in South Korea. A few days earlier, police and tax collecting agencies raided the country’s largest digital currency exchanges on the grounds of alleged tax evasion.
The craze for crypto buying in local Korean investors is so high that you will see the cryptos trading at a premium of 30% on South Korean exchanges in comparison to other global exchanges.