Following the news that there can be a possible ban on trading of cryptocurrencies in South Korea, there was a major fall in the value of all of the major virtual coins including bitcoin, ripple and etehreum on Thursday.
According to data from Coinmarketcap.com, there was a fall of 9 per cent in the value of ripple, more than 11 per cent in price of Ethereum and 6 per cent in the price of bitcoin at 7:25 a.m. London time compared to their price a day earlier. However, later in the morning, most of the virtual coins against regained some of their lost values. By 8:10 a.m. London time, there was a rise of a tenth of a percent in ripple.
The ministry is “basically preparing a bill to ban cryptocurrency trading through exchanges”, South Korean Justice Minister Park Sang-ki said on Thursday.
In comparison to the market capitalization of all of the cryptocurrency market at the beginning of the day on Thursday, there was a wiping off of over $106 billion of value at around 4.50 a.m. London time, just a few minutes after the news from South Korea. The market later gained some of the losses made during the rest of the day.
It was very recently that two of the major cryptocurrencies touched record high and Thursday’s fall followed that high point. On January 4, an all-time high price of $3.84 was hit by ripple. But as of 8:00 a.m. London time on Thursday, there has been a fall of over 50 percent in that price for ripple.
South Korea cryptocurrency trading market is one of the largest in the world. According to industry website CryptoCompare, between 6 percent to 12 percent of all bitcoin trading is accounted for by the South Korean cryptocurrency exchanges. The same country accounts for over 14 percent of all trading of Ethereum. And for ripple, dependent on the day, up to 33 percent of all global trading of the virtual currency is done with the South Korean won.
No concrete details of any planned legislation over cryptocurrencies was given by the South Korean government. There were “enough discussions”, according to Reuters, with South Korea’s Finance Ministry and financial regulators and other government agencies before announcement of the proposed ban on cryptocurrencies was made.
South Korean exchanges tend to trade cryptocurrencies such a bitcoin at premium prices. This means that the prices there are generally higher for the cryptocurrencies compared to the prices at other virtual currency exchanges in the U.S. or Europe for example.
Citing “extreme divergence in prices from the rest of the world”, some South Korean cryptocurrency exchanges were delisted by industry data provider CoinMarketCap in the manner in which the firm calculates the cryptocurrency prices earlier this week.
(Adapted from CNBC.com)