SEOUL – The price of Bitcoin plunged on Thursday more than 10 percent after the South Korean government revealed it was working on a draft law to ban transactions using cryptocurrencies.
The price of Bitcoin fell by up to 14 percent on the United States platform Bitstamp, reaching $12,800 during its trading hours in Asia, while the price fall was limited to 12.47 percent on the website CoinMarketCap.
The South Korean Minister of Justice, Park Sang-ki, said Thursday that there is great concern regarding virtual currencies, and that the government is preparing a draft law to ban cryptocurrency exchanges in the country, which is among the largest markets for these virtual currencies, along with the United States and Japan.
The spectacular surge in Bitcoin’s value in 2017, of around 1,500 percent, has fueled the demand for cryptocurrencies in South Korea, where, according to the latest polls, one out of 10 citizens have invested in this type of asset, giving rise to fears that this might trigger their use for criminal activities.
The South Korean government is aiming to toughen the regulation of cryptocurrencies and, in September, it banned initial coin offerings for all cryptocurrencies to prevent the formation of an asset bubble in the Asian country.
Cryptocurrencies have become a popular form of payment in Japan and South Korea, as well as a pension fund and also a way to deposit savings amid low returns of other investment assets.
However, analysts warn of a possible bubble effect as the strong increase in the value of these currencies is not a reflection of their actual price, leading to a risk of a sharp fall in their value.