Last year both China and Vietnam placed restrictions on Bitcoin and cryptocurrencies. China moved to shut down exchanges within its borders and crack down on crypto-mining companies, while Vietnam implemented a total ban on crypto-based payments. Now South Korea, which had already been trying to decide whether to shut down crypto exchanges, has moved to ban them.
The government has plans to implement a new law that bans cryptocurrencies being traded through exchanges, which is one of the easiest ways for people to buy and sell the virtual currencies. The currencies are causing the government "great concern" according to Park Sang-ki, the South Korean justice minister, and this move comes days after several major exchanges were raided as part of an investigation into tax evasion.
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.
While the law will need to pass through the South Korean National Assembly, the news has been enough to trigger a massive drop in Bitcoin's value as investors sold off the coins en masse. Reuters reports that the local price dropped by 21 per cent at midday trading following Park's comments, and according to BBC News the global price fell by seven per cent. Due to the volatile nature of Bitcoin's value, however, it's unclear how much of the global drop was related to South Korea's decision.
How much effect the Korean exchange ban will have isn't clear, but Mun Chong-hyun, chief analyst at EST Security, claims that trading in the country won't be impossible. It'll be a lot more difficult, however, and many people, hackers included, will likely switch to using exchanges in places like Japan.
For some Bitcoin's rising value seems to have been a double-edged sword. While investors and coinholders can get more money out of the virtual currency, it has brought increasing amounts of attention from authorities and regulators. It's no surprise that some nefarious people are switching over to cryptocurrencies that are more anonymous and generally less well known. [BBC News | Reuters]