There was a seismic reaction from the cryptocurrency market to news that the South Korean government is preparing a bill to ban local cryptocurrency exchanges sending major coins: Bitcoin, Ethereum, Ripple and Litecoin tumbling earlier on Thursday before paring those losses.
Any bill to ban trading would need to pass the National Assembly, a process that could take many months or years. The website, CoinMarketCap removed prices of bitcoin from South Korean exchanges, as it was trading at a premium of 30 percent in the country.
Q: Other countries like the USA and Japan are not closing exchanges. Now the South Korean Government has made a decision to ban cryptocurrency trading stating that it is illegal. Even after the raid, Bitcoin is trading at $18,300 at the Bithumb exchange.
Bitcoin opened at US$14,890.72, but then quickly started its decline to a low of US$12,845.71 at noon, according to an index by specialist virtual currency news site CoinDesk that tracks prices from exchanges such as Bitstamp, Coinbase and Bitfinex.
The commission added that, since much of the cryptocurrency trading was being done anonymously, users must use their real names.
Once enforced, South Korea's ban "will make trading hard here, but not impossible", said Mun Chong-hyun, a chief analyst.
There are really two separate markets for cryptocurrencies - South Korea and everywhere else. "Some officials are pushing for stronger and stronger regulations because they only see more [investors] jumping in, not out", Mr Park said.
An unidentified spokesman told the Financial Times: "They asked for some data such as cryptocurrency trading volume, our exchange's sales and whether we are paying corporate tax well". Riot Blockchain (RIOT) and Overstock.com (OSTK) fell 0.6% in premarket trading on the stock market today.
While the specific details of the law aren't known at this time, it's believed that the new law will allow the South Korean government to shut down crypto exchanges.
A representative of Bithumb, one of around 20 virtual currency exchanges in South Korea, said the company was watching developments closely.
Police have been investigating Coinone's margin-trading service since a year ago, according to an official who asked not to be named citing policy.