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Cryptocurrencies Retreat Amid South Korea Clampdown Concerns
Bitcoin slumped as South Korea’s justice ministry reiterated a proposed ban on cryptocurrency venues, fueling concern that a government crackdown will erode one of the world’s biggest sources of demand for digital currencies.
Bitcoin slumped as South Korea’s justice ministry reiterated a proposed ban on cryptocurrency venues, fueling concern that a government crackdown will erode one of the world’s biggest sources of demand for digital currencies.
The ministry is preparing a bill that would outlaw cryptocurrency trading via exchanges, Justice Minister Park Sang-ki told reporters today. The government disclosed a similar plan on Dec. 28. Separately, one of Korea’s biggest cryptocurrency exchanges, Bithumb, said it met briefly with tax officials on Wednesday. The exchange denied a Reuters report that its offices had been raided.
Bitcoin dropped 10 percent to $12,986.41 at 12:36 p.m. Hong Kong time, extending its decline from last month’s high to more than 30 percent, data compiled by Bloomberg show. Ripple fell 21 percent and ethereum slumped 8.7 percent.
“For the last few months the Korean government has been making it very clear they want to bring this speculative activity under control and this isn’t really too much of a surprise,” said Thomas Glucksmann, Hong Kong-based head of APAC business development with cryptocurrency exchange Gatecoin Ltd. “This short dip in price is really an immediate reaction to this news.”
Some investors may also be reacting to China’s crackdown on bitcoin mining operations, he said.
Governments around the world are increasing scrutiny of cryptocurrencies as surging prices attract everyone from individual investors to Wall Street banks. Korea has emerged as something of a ground zero for the speculative frenzy, with the nation’s prime minister warning recently that the boom might corrupt the nation’s youth.
The U.S. Senate will hold a hearing with the country’s top markets regulators to discuss risks posed by cryptocurrencies such as bitcoin, Reuters reported, citing an unidentified person with direct knowledge of matter.
For more cryptocurrency coverage:
World’s Top-Ranked Crypto Venue Added 240,000 Users in One Hour
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US Senate to Discuss Cryptocurrency Risks at Feb. Hearing: Rtrs
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For a menu of cryptocurrencies on the Bloomberg: VCCY
For bitcoin prices: XBT Curncy
— With assistance by Kyungji Cho