1:00 pm UTC update: Korean officials are backtracking on all of the news of potential bans. South Korea’s Finance Ministry apparently wants no part of a ban, per this CCN update.
And the chief press secretary of South Korean President Moon Jae-in issued this statement:
“Justice Minister Park Sang-ki’s remarks regarding the shutdown of cryptocurrency exchanges is one of the measures that have been prepared by the Justice Ministry, but it is not a finalized decision and will be finalized through discussion and a coordination process with each government ministry.”
It seems that news of potential South Korean cryptocurrency ban was premature at best and possibly irresponsible journalism at the other extreme.
Original article begins here.
The cryptocurrency markets appear to be in free fall at press time (Jan-11-2018 5:22 UTC,) with only one of the top 20 coins (by market cap) experiencing a price gain. Indeed, while EOS price has posted a double-digit percentage gain over the last 24 hours, the other 19 have fallen considerably with several posting double-digit percentage losses. Most coins outside of the top 20 have also experienced steep price declines.
Several hours ago news broke about possible bans on crypto trading by the government of South Korea. Asian markets overall and Korean traders in particular have significantly contributed to increasing global demand for cryptocurrencies. Recent price spikes have been traced to increasing trade on exchanges dependent on Korean traders. Korean trades account for approximately 10% of all ethereum and 5% of all bitcoin trades. Daily volume of trading against the South Korean won is exceeded only by US dollar trading.
While the news is certainly troublesome to crypto investors already weary from price declines earlier in the week, it is important to keep in mind that South Korea is only at the stage of possibly introducing legislation to curb crypto trading. No sanctions or restrictions have been announced or implemented. Indeed, a Reuters report went on to point out “Once a bill is drafted, legislation for an outright ban of virtual coin trading will require a majority vote of the total 297 members of the National Assembly, a process that could take months or even years.”
Coindesk has reported that exchanges Bithumb and Coinone were contacted by Korean officials, but reports suggesting they were “raided” seem to be overblown. Representatives claim they are cooperating fully with Korean tax officials.
Experienced crypto investors may recall the news of possible bans in China in the fall of 2017. Those bans never came to fruition, and crypto prices subsequently erased all of the losses of that brief period followed by an historic run up in prices and total market capitalization. Long term investors were handsomely rewarded for avoiding panic trades.
Will that history repeat itself? Only time will tell of course. In the meantime, always keep in mind the volatility of cryptocurrency markets. Investors should always assess their own risk tolerance as well as the overall asset distribution of investment portfolios before committing investment funds to cryptocurrency.