The price of bitcoin and other cryptocurrencies dropped significantly today off the back of ‘news’ that South Korea’s government might ban trading exchanges.
As ever in the world of crypto, the slightest ripple of information can be taken out of context, and that appears to be the case here.
Reuters reported comments from Korean Justice Minister Park Sang-ki who said claimed his ministry “is basically preparing a bill to ban cryptocurrency trading through exchanges” following “enough discussion” with a range of government agencies, including the finance ministry.
As Reuters itself points out, any draft legislation would require the approval of parliament which could take months, if not years. Even if that were to happen, the timing seems off with local elections upcoming this year and bitcoin, ethereum and other coins hugely popular among young people in Korea.
Looking back just weeks, today’s quotes also fly in the face of previous comments from the government’s financial regulators, which had said that it plans to prevent minors, foreigners and institutions from owning and trading cryptocurrency.
Nonetheless, with Korea being the world’s largest trader of bitcoin on a country basis, the scare was enough to spread fear and move the market. The price of bitcoin lowered to $13,126, according to Coindesk, that’s the lowest since December 30. The price later rebounded as context was added to the minister’s comments.
Exchanges themselves don’t seem to be too moved by the minister’s apparent intention. TechCrunch spoke to sources at two Korea-based exchanges both of whom dismissed the comments are politicking from one branch of the government.
TechCrunch understands that the government has been in contact with prominent exchanges to gather information, while — as reported by Reuters — it has visited some exchanges. According to Reuters, some visits were based on looking into the tax situation of exchanges which has led to suggestions that unregistered exchanges may be banned.
To sum the situation up, hours after Park Sang-ki’s comments, a representative of President Moon Jae-in told Korean media [link in Korean] that the Justice Ministry’s position does not reflect that of the entire government.
So — tl;dr — we’re no closer to knowing exactly what steps Korea will take to regulate bitcoin exchanges.
Disclosure: The author owns small amounts of cryptocurrency, including bitcoin.