The price of bitcoin, the world’s most popular cryptocurrency at present, took a beating Thursday after reports said South Korean Justice Minister Park Sang-ki was planning a ban on cryptocurrency exchanges in the country, which is a global hub for such trading platforms. But on Friday, the country’s finance minister reportedly made statements toning down the plan to merely a proposal, prompting some recovery in the value of bitcoin.
“The issue of shutting down (cryptocurrency) exchanges, told by the justice minister yesterday, is a proposal by the justice ministry and it needs consultations among ministries,” South Korean Finance Minister Kim Dong-yeon said, according to Yonhap News Agency. The government would, however, continue clamping down on speculative investments in virtual currencies, he added.
Following the South Korean justice minister’s comments Thursday, the price of bitcoin fell from a high of over $14,800 to a low point of under $12,900. But after the finance minister issued what amounted to a clarification, bitcoin was trading at over $13,750 in less than 5 hours from the low point, according to prices compiled by Coindesk.
Even if the proposal actually got clearance, and became a bill, it would take at least many months, possibly even a few years, before it could become law.
The justice minister’s comments also unleashed a public outcry, with tens of thousands of South Koreans filing an online petition that asked the president’s office “to stop the clampdown against cryptocurrency trading,” Yonhap reported.
Apparently, there was also at least one petition that wanted the justice minister fired from his job over his comments.
South Korea, being the cryptocurrency hub it is, seems quite serious about regulating the burgeoning sector. Earlier this week, head of the country’s financial regulator said Seoul was holding discussions with China and Japan to enlist their cooperation in regulating the industry.
Chairman of the Financial Services Commission Choi Jong-ku said vice finance ministers of the three neighboring countries had met in December and discussed setting up “a detailed system of cooperation” over cryptocurrencies. He also said six retail banks in the country were being inspected for accounts that may be linked to cryptocurrency trades.
Cryptocurrencies are not officially recognized as financial products in South Korea — like in most other countries — and no regulations exist around them. But Seoul has tried to maintain some order by trying to ensure cryptocurrency exchanges and mining operations follow the country’s money-laundering and fraud laws. A multimillion-dollar cryptocurrency scam was busted in December by South Korean authorities, leading to the indictment of over two dozen people.
Between 3-4 percent of the South Korean population, or over 2 million people, is estimated to hold some amount of bitcoin. The digital currency is used by a number of small businesses, and the topic is keenly followed by a large number of people in the country.