Bitcoin as well as other cryptocurrency is currently experiencing a huge slumped as South Korea’s ministry of justice reemphasized its proposed ban on crypto trading. This has raise a big concern that the South Korean crackdown will erode one of the world’s biggest sources of demand for digital currencies.
According to Justice Minister Park Sang-ki in a report today, the justice ministry is preparing a bill that would outlaw crypto trading through exchanges. The South Korean government disclosed a similar plan on December 28. Separately, one of Korea’s biggest cryptocurrency exchanges, Bithumb, said it met briefly with tax officials on Wednesday. The exchange, however, denied a Reuters report that its offices had been raided.
This clampdown could possibly be the reason why Bitcoin dropped 10 percent to $12,986.41 at 12:36 pm Hong Kong time, extending its decline from last month’s high to more than 30 percent, according to exchanges. Ripple fell 21 percent and Ethereum slumped 8.7 percent.
Thomas Glucksmann, the Hong Kong-based head of APAC business development with cryptocurrency exchange Gatecoin Ltd said:
“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. 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 added.
Governments around the world are increasing scrutinizing crypto trading 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.
This year has not been so favorable for bitcoin as it receives more oppositions both from government and other cryptocurrencies, which may eventually cause an unimaginable fall in its value.