Bitcoin price plummets as other cryptocurrencies follow suit
The price of Bitcoin suffered a decline by more than 9% after plans to ban virtual currencies in South Korea emerged. Cryptocurrencies such as Ethereum and Ripple equally witnessed losses in price following information of the new bill.
Ethereum, which had grown tremendously in the previous months to become the second-largest cryptocurrency by market cap, suffered a 5% drop in price. Ripple, the third-largest on the other hand, saw its value drop by 15%, according to Coindesk.
The news of the new bill has signaled fear for investors as South Korea had carved a name for itself in the virtual currency world—accounting for nearly 20% of all the global Bitcoin transactions. This though was at the detriment of the government who were faced with a number of challenges.
According to the Korea Blockchain Industry Association, there are quite a number of cryptocurrency exchanges in South Korea, with several of them being probed this week on counts of tax evasion.
The crackdown of virtual currencies in South Korea is believed to have a direct connection with decisions made by global policymakers, who have continually disregarded the growing market of virtual currencies—with Bitcoin and Ripple inclusive.
The decision to ban virtual currencies in South Korea hasn't been finalized though, as Justice Minister Park San-ki confirmed that the nation was preparing to pass a new bill to place a ban on cryptocurrency trading on domestic exchanges.
“There are great concerns regarding virtual currencies and the Justice Ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” Park told local press on January 10.
It is not yet definite whether the ban would still be enforced, particularly because the South Korean government is reportedly considering other ideas like cracking down on unlicensed exchanges instead.
“The position is that the Korean authorities are clamping down on unregulated exchanges and exchanges that are not compliant,”said Ran Neuner, host of CNBC's Cryptotrader show, on Twitter.
“Further, they are auditing the quality of the KYC (Know Your Customer). A ban is not on the cards,” Neuner added.
While the speculation continues to grow, one thing is certain: South Korea has a major influence in the virtual currency market, and if the ban gets enforced, it's expected that the value of cryptocurrencies would drop further—as evident by the sudden decline due to speculative reports.
As always, the volatility of cryptocurrency remains and investors are advised to proceed with caution—as despite the current trend, the risks should be equally considered. Though, a risk free venture could be trying out a new online casino.