South Korea finance minister, Kim Dong-yeon said officials need to hold more consultations over the justice ministry’s plan to ban cryptocurrency exchanges in the country.
And in the wake of his comments the justice ministry apeared to soften its stance and insisted the proposed ban was not a done deal.
He said conversations were taking place on how the Government could regulate cryptocurrency trading. It has been overheating recently due to speculative behaviour.
Mr Dong-yeon said: “All government ministries agree on the need for a government response to an overheating in cryptocurrency speculation and for a degree of regulation.
“The issue of banning exchanges that the justice minister talked about yesterday is a proposal by the Justice Ministry and it needs more coordination among ministries.”
The justice ministry said: “The ministry has been preparing a special law to shut down all cryptocurrency exchanges, but we will push for it after careful consideration with related government agencies.”
This talk of a possible banning of cryptocurrency trading hurt the value of bitcoin as it led to a fall of 12 percent.
Bitcoin price today lies at $13,775.
South Korea presidential office made it clear that the justice ministry’s statement was far from finalised.
The chief press secretary to President Moon Jae-in said in a statement: “Remarks regarding the shutdown of cryptocurrency exchanges is one of the measures that have been prepared by the Justice Ministry, but it is not a finalised decision and will be finalised through discussion and a coordination process with each government ministry.”
Even if a bill aiming to ban cryptocurrency trading was put together it would need a majority vote to be authorised in the country’s National Assembly before it can be turned in to law.
This process could take months to a year.
South Korea is seen as one of the biggest cryptocurrency markets in the world.
Dave Chapman, managing director at Hong Kong-based commodities and digital assets trading house Octagon Strategy, said: “Given the acceptance of cryptocurrency as a whole, and now its further adoption, and the appreciation of the entire market, it’s hardly surprising to think that regulators are looking at this with some scrutiny.
“From a regulator’s perspective, they are trying to do the right thing. It’s about consumer protection and given that the heightened sort of fever in this asset class, it is right that they’re looking into this further.”
Cryptocurrency trading in South Korea is incredibly speculative and the price of bitcoin and ethereum are higher than elsewhere in the world.