South Korea has been making a reputation for itself as a global trading centre for cryptocurrencies, but earlier this month surprised investors by announcing a proposed ban on trading. However, it has revised its initial statement and said that plans have not been finalised.
An official at the Office for Government Policy Coordination has said, "The plan to ban cryptocurrency exchanges, recently mentioned by the nation's justice minister, is one measure in talks to curb speculative investments, which the government will carry on with enough discussion for before finalising the decision."
The President's Office released a similar statement, saying that the announcement of the proposed ban was only the opinion of the Justice Ministry.
Prices for currencies like Bitcoin plunged in response to the news, on the 11th January, that South Korea was considering a ban due to the difficulty of regulation and the use of cryptocurrencies for illegal transactions and tax evasion. Some of the largest exchanges, like Coinone, have been raided by police in relation to these allegations.
Justice minister Park Sang-ki said at the time, "There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges."
The news triggered a sell-off, with the local price of Bitcoin falling more than 20 per cent - although it still trades at about 30 per cent more than in other countries.
An analyst at South Korea's EST Security, Mun Chong-hyun, said that a ban would make cryptocurrency trading in the country "difficult...but not impossible." There are more than a dozen exchanges in South Korea, according to the Korea Blockchain Industry Association.
Legislation for an outright ban would require a majority vote in the National Assembly, which could take years.
Yoo Young-min, minister of science and IT, reassured blockchain stakeholders that the technology would not be affected by a ban:
"Blockchain is not a complete technology, but a technology in progress. It's important to develop sophisticated technology in the early stage and find useful use cases," he said.
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