Bitcoin sinks 14pc below US$13,000 after South Korea mulls ban on cryptocurrency trading

South Korea intensifies crackdown on speculative trading in virtual currencies in the country, citing “great concerns”

PUBLISHED : Thursday, 11 January, 2018, 4:04pm
UPDATED : Thursday, 11 January, 2018, 11:42pm

Bitcoin prices plunged on Thursday by nearly 14 per cent, after South Korea intensified its crackdown on virtual currencies and considers a ban on all cryptocurrency trading in the country, one of the world’s largest bitcoin markets.

Bitcoin opened at US$14,890.72, but then quickly started its decline to a low of US$12,845.71 at noon, according to an index by specialist virtual currency news site CoinDesk that tracks prices from exchanges such as Bitstamp, Coinbase and Bitfinex.

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

Earlier in the day, South Korea’s justice minister Park Sang-ki said the government was preparing a bill to ban all cryptocurrency trading in the country, which is a key market for bitcoin and ethereum trading.

China plans to deter bitcoin miners by curbing electricity use

Park cited “great concerns” about virtual currencies.

The comment from Park came after South Korea’s largest cryptocurrency exchanges were raided by police and tax agencies this week for alleged tax evasion, according to a report by Reuters.

Why is South Korea suddenly terrified of bitcoin?

South Korea houses some of the world’s most active virtual currency exchanges, including Bithumb and Coinone.

But prices on the country’s crypto exchanges are speculative. Bitcoin, for example, traded at US$17,028 and US$16,975.01, respectively, on Coinone and Bithumb, representing a premium of 27 per cent to the CoinDesk price index.

The speculative trading on Korean exchanges has caused CoinMarketCap, a data compiler for cryptocurrencies, to exclude their prices.

“This morning we excluded some Korean exchanges in price calculations due to the extreme divergence in prices from the rest of the world and limited arbitrage opportunity,” CoinMarketCap said earlier this week.

In December, South Korean Financial Service Commission said that it would prohibit crypto exchanges from issuing new trading accounts from January.

China’s Communist Party paper bashes bitcoin but still no sign of ‘bubble’ bursting

China too has already banned bitcoin trading and initial coin offerings since September and is currently clamping down on relevant mining activity.

Separately, US billionaire investor Warren Buffett said on Wednesday that bitcoin and other cryptocurrencies will “come to a bad ending” and he will not take a short position on bitcoin futures, according to an interview by CNBC.