The country has been at the forefront of massive cryptocurrency adoption this year and the government has struggled to keep up with developments and trading in the industry, where arbitrage between exchanges is commonplace. Earlier in December, the South Korean government laid out plans to shut down some exchanges in the country and they reiterated those plans this week.
Bitcoin has recently been trading nearly 30 percent higher on South Korean exchanges compared to average international rates, according to Bloomberg. Policy makers seem intent on curbing - or at least slowing - the currency’s enormous popularity. In a press release, the South Korean government expressed its worry over what is being labelled as a cryptocurrency ‘obsession’ in the country:
“Cryptocurrency speculation has been irrationally overheated in Korea. The government can’t leave the abnormal situation of speculation any longer.”
Plans to wrestle back some control over cryptocurrency trading includes banning banks from providing virtual accounts to cryptocurrency exchanges. Likewise, the government reiterated its authority to close cryptocurrency exchanges, but stopped short of stating its intention to do so.
Given that South Korea is accountable for up to a fifth of the world’s cryptocurrency trade, the price of Bitcoin and Ethereum both tumbled on Thursday, perhaps in reaction to the uncertainty created by the government’s most recent misgivings.
Bitcoin saw a 12% dip in value over 24 hours, dropping from $14,900 to a low of $13,100. However, the market has largely recovered, rising to $14,800 at press time.