The South Korean government is planning to introduce a new law against trading cryptocurrencies across its exchanges due to ‘great concern’ about tax evasion.
Following the initial ban to raise money through cryptocurrencies in September last year across South Korea, the government is now hoping to make the move a legally binding law to ban initial coin offerings as well as trading of all digital currencies, including Bitcoin.
The crackdown on the currency from South Korea came after the Justice Minister stated virtual currencies are causing the government great concern, following a raid by police and tax agencies this week.
Virtual currency operator Bithumb and Coinone were raided after being suspected of tax evasion. The raid comes after movement by the finance ministry to find ways of taxing the market that has become a huge daily trading system.
Park Sang-ki, Justice Minister, said the government is preparing a bill to ban trading of the virtual currency on domestic exchanges. According to Reuters, Sang-Ki spoke at a press conference and said: “There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges.”
Although the South Korean government is adamant of the ban being implemented, once the legal bill has been drafted legislation to formally ban virtual coin trading may only be granted by a majority vote from the 297 members of the National Assembly. This process could take months or even years.
On Thursday, Bitcoin fell by around 7% to just under $13,800 bringing the question to whether the cryptocurrency tumbled as a result of South Korea’s announcement. However, after months of fluctuations of the currency, it has somewhat become a norm to see and the decision from South Korea may have had no impact at all.
The cryptocurrency ban has also been implemented across China, Russia and Vietnam but no laws are currently in place.