On Thursday, South Korea's government stated that it intends to ban cryptocurrency trading, which resulted in chaos in the virtual coin market sending the price of bitcoin into the ground, as the nation's police and tax authorities raided local exchanges on alleged tax evasion.
The justice ministry is "basically preparing a bill to ban cryptocurrency trading through exchanges", Mr Park said. A majority vote from the 297-member National Assembly is needed to turn the drafted bill into legislation, and the process could take anywhere from a few months to several years, depending on how contentious the issue is.
Major cryptocurrencies like bitcoin are often traded at a premium on South Korean exchanges, meaning that they are at a higher price versus other exchanges in the US or Europe for example. Some compare it to gambling which could attribute to South Korea's substantially higher exchange prices.
The country's justice minister said South Korea is planning a ban, but the presidential office said later that a ban is under review. It is also important to get a feel for just how speculative digital monies like Bitcoin are right now before investing directly in the currencies or through related exchange traded funds or stocks.
Bitcoin dropped as much as 12% to $12,801, before paring the loss to about 5% at 9.10am NY time, according to data compiled by Bloomberg.
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Based on Korean Blockchain industry, the country is witnessing more than a dozen cryptocurrency exchanges in South Korea.
That news is a major development for the cryptocurrency space, as South Korea is one of the biggest markets for major coins like bitcoin and ethereum. For ethereum, this figure is higher at around 14 percent.
The government had already said in December that it would apply more scrutiny to the exchanges, including moves to curb anonymous trading. "The government is examining how much to regulate virtual currency trading", said Jonh-ku. At the time of press, Bitcoin was trading for around $13,350, down from the valuation of roughly $15,000 preceding the revelation of the proposed bans.
An official at Bithumb told the press, "We were asked by the tax officials to disclose paperwork", while Coinone says it is cooperating with investigative efforts. "If we ban virtual currency exchanges altogether as the Financial Services Commission recommends, we are likely to end up in a situation where nobody takes the responsibility." said Jin-hwa via Khan.
On the same day financial authorities inspected six local banks that offered virtual accounts for corporate customers.