All the major cryptocurrencies, including Bitcoin, Ethereum, and Ripple, have taken huge hits in the last 12 hours. The global cryptocurrency market is down nearly $100 billion following news that South Korea, one of cryptocurrency’s biggest markets, is considering a ban on all crypto trading in the country.
At a press conference this morning, Justice minister Park Sang-ki said that the government is drafting a bill that would ban all trading of virtual currencies on exchanges located in South Korea. “There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” Park told a news conference, according to Reuters.
The news sparked a panic among cryptocurrency investors. The price of Bitcoin within South Korea plummeted by $2,000, and the global price of Bitcoin on the GDAX exchange dropped by 12 percent immediately, before rebounding in the following hours. Alternative currencies were particularly hard-hit: Ethereum dropped globally by around nine percent, and Ripple, a recently-popular alt-coin, fell by over 50 percent in one go.
According to CNBC, the global cryptocurrency market lost $106 billion in market cap in the space of a few hours, before beginning to claw back some of those losses. Following the crash in value, the South Korean government clarified that its draft bill was not finalized, and so no decision has been formally made as of yet. Once the government presents a draft bill, it will still have to go through the legislative process and be passed by the National Assembly, which is likely to take months. In the meantime, you can expect crypto exchanges catering to South Koreans to set up shop outside of the country.
Thus far, China is the only country to have successfully banned crypto trading. In its case, the decentralized currency posed a threat to China’s tightly-regulated domestic banking system, and China’s “Great Firewall” provided an easy way to prevent crypto-currency trading in the country. South Korea does not exercise the same control over its currency or internet services, meaning any ban might be harder to enforce.