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The ministry is preparing a bill that would outlaw cryptocurrency trading via exchanges, Justice Minister Park Sang-ki told reporters today. Korea's government disclosed a similar proposal on Dec. 28, though at the time it also included other options such as allowing trading to continue under tighter regulation.
Bitcoin dropped as much as 12 percent to $12,801, before paring losses to about 6 per cent, according to data compiled by Bloomberg. Ripple fell 14 per cent and ethereum slumped 4 per cent.
Governments around the world are increasing scrutiny of cryptocurrencies as surging prices attract everyone from individual investors to Wall Street banks. Korea has emerged as something of a ground zero for the speculative frenzy, with the nation's prime minister warning recently that the boom might corrupt the nation's youth. The government said in December that it would be conducting on-site investigations of the nation's cryptocurrency exchanges.
Even if Korean lawmakers push forward with an exchange ban, local investors are likely to keep investing in cryptocurrencies through over-the-counter platforms and overseas venues, said Mike Kayamori, head of Tokyo-based exchange Quoine, which counts Koreans among its customers.
"There are always underground exchanges and OTC," he said. "They'll probably convert their money into bitcoin there, and then start trading offshore."
