Leaving aside the massive growth in value for Bitcoin in 2017, the digital currency is off to a rocky start in 2018. This is mostly due to increased volatility, given the end of the holiday season, alongside with several world events, with direct consequences in the bitcoin price.
Therefore, on the 9th of January, the bitcoin price plunged by roughly 13.5%, which is approximately $2,000, following news that South Korea is actively planning to ban digital currency trading within the country.
For those who do not know, South Korea is one of the world’s leading countries, in terms of trading volume. This also means that issues such as tax evasion can be more prevalent here, when compared to other territories. This led to several raids made by law enforcement and tax authorities, against digital currency exchanges, in order to see whether tax evasion was a real issue, and what exchanges were doing to prevent it.
According to the Justice Minister of South Korea, “There are great concerns regarding virtual currencies and [the] justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges.”
The news that South Korea is preparing to issue a ban against crypto trading has had major effects in the price of bitcoin and other digital currencies as well. The price tumbled by $2,000, yet a recovery was seen in the early hours of the morning.
It is important to point out the fact that at this time, in South Korea, bitcoin and other currencies trade at a premium as high as 30% when compared to other countries of the world – once the news hit it, the local price fell by around 21%.
The process of getting such a bill approved is a bit difficult, however. Once it is fully drafted, its implementation would require a majority vote of the 297 members of the South Korean National Assembly. This is a process that could take anywhere between a few months to several years. Additionally, the bill can also fail, which means that current legislation will continue to apply.
Several economic analysts involved in the matter did state that the bill will not completely ban digital currency trading, but rather make it more difficult for the average folk. Most likely, anti-tax evasion efforts will also be made. It has also been stated that traders may find it more difficult to cash out their profits from trading, yet going to another country for this purpose is doable.
Following the comments, over 50 thousand citizens signed a petition asking the government to stop the crackdown on digital currencies.
Based on everything that has been outlined so far, what are your thoughts on the possible trading crackdown by the South Korean government? Let us know your thoughts in the comment section below.