Mass confusion and a wave of panic selling has ensued during the Asian trading session this morning on reports that the South Korean government has banned crypto trading and raided exchanges. The Southeast Asian nation carries as much as 20% of the global trade so anything that happens there will have a ripple effect across the markets.
While it is true that government tax inspectors visited a number of the country’s major exchanges this week there was no clampdown and nothing has been shut down. Both Bithumb and Coinone were visited by police and tax officials who asked to see documentation and questioned bemused staff who told local media;
“A few officials from the National Tax Service raided our office this week. Local police also have been investigating our company since last year, they think what we do is gambling,”
Bithumb is the second largest exchange in the world with a daily trade volume exceeding $4 billion. The South Korean government is seeking more transparency in the burgeoning crypto market that has attracted everyone from housewives to students. According to local media Yonhap News the government is developing a system which seeks to ban the use of anonymous trading accounts. Under the measure, only real-name bank accounts and matching accounts at cryptocurrency exchanges can be used for deposits and withdrawals, while the issuance of new virtual accounts to cryptocurrency exchanges will be banned.
Some news agencies such as CNBC have completely misreported this as an outright ban;
“South Korea’s justice minister said that the country is preparing a bill that will ban all cryptocurrency trading”
This is incorrect; the ministry is trying to ban anonymous trading accounts and prevent money laundering. There is no ban on crypto currency in South Korea and exchanges are all operating as usual.
Naturally a panic selloff has ensued and all digital assets have fallen this morning. Bitcoin has taken a dive falling 25% from $17,500 to just over $14,000. Bitcoin Cash, Ethereum and Litecoin are also retracting however Ripple has taken the biggest hit with a 50% drop in less than a week. Fame is fleeting in crypto land, last week’s the talk of the town has slid from a high of $3.80 to $1.65 at the time of writing.
All other altoins are trading lower, many falling by double digit percentages. It is not the first time South Korea has flexed its muscles at crypto traders and it wont be the last. Panic selling is a sign of immaturity, but it is to be expected in a market that is barely a year old.