The government of South Korea on Thursday announced plans to ban the trading of cryptocurrencies, which pushed prices down and alarmed the crypto community, while the police and the country's tax authorities conducted searches on stock exchanges in connection with suspicions of tax evasion.
The authorities of South Korea, one of the biggest players in the crypto space, have announced tough measures amid attempts by officials around the world to deal with Bitcoin regulation, which skyrocketed in 2017 by 1,400%.
Minister of Justice of South Korea, Park Sang-ki, said that the government is preparing a bill on the prohibition of trade in cryptocurrency at local exchanges.
"There are great concerns regarding virtual currencies, and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” he said at a press conference.
For a total ban on virtual currency trading, a majority of the votes of the South Korean parliament is needed, and the process of adopting the bill may take months or even years.
Rigid government rhetoric provoked the sale of cryptocurrency at local and foreign sites.
The price of Bitcoin in South Korea fell 21% after the comments of the Minister of Justice.
At the Luxembourg-based Bitstamp exchange, Bitcoin fell 8.8% to $13,580 after falling to $13.120, the lowest since January 2.
This week, police and tax authorities of South Korea conducted searches at the country's largest crypto exchanges, such as Coinone and Bithumb, due to suspicions of tax evasion. These measures followed the attempts of the Ministry of Finance to find ways of taxing the crypto market, which equaled the South Korean index for small-caps – Kosdaq, in terms of daily trading volume.
A Coinone employee confirmed to Reuters that the South Korean tax authorities searched the office of the company this week. The Bithumb exchange operator also reported on the searches that took place on Wednesday.
The Tax Service and the police refused to confirm the information about the searches.