The exponential surge in the value of bitcoin, the world’s most prominent cryptocurrency has made a considerable impact on the world of trading. The virtual coin market has emerged as a breakthrough of technology over the past year. Though there have been mixed responses about its reliability and future, the boom has made many major exchanges to start bitcoin trading on their platforms. However, it became a headache for tax authorities of governments to stop tax evasion and take necessary measures to avoid it in future.
One of the crucial markets for digital currency, South Korea, may become a darksome market in the future as justice ministry of the country gears up to ban cryptocurrency trading and tax authorities raid local exchanges. As one of the cornerstones of the world in virtual coin industry, it failed to regulate the asset which grew significantly in past year. The justice ministry has been preparing a bill to ban cryptocurrency trading through exchanges after discussion with finance ministry and regulators.
Police and tax authorities of country have raided the biggest cryptocurrency exchanges of the country, Coinone and Bithumb for alleged tax evasion. Analysts believe that herd behavior in the digital coin industry led to growing concerns of authorities to stop tax evasion. The 1,500 percent rise in value of bitcoin has attracted college students, housewives, and others to invest in cryptocurrencies. Moreover, local authorities also fear that peaked interest may lead to gambling addiction. As more people jump in, authorities have been seeking stringent regulations to keep it under their control.
Raids by authorities and discussions about ban affected the value of bitcoin. The website, CoinMarketCap removed prices of bitcoin from South Korean exchanges, as it was trading at a premium of 30 percent in the country. Moreover, it created confusion and gave rise to huge selloff among investors. According to Coilhils.com, the value of bitcoin reduced by 4 percent after the comments from justice ministry were released. The value dropped by more than 10 percent in Luxembourg-based exchange, Bitstamp.
It is evident that thee scenario in South Korea affects the industry worldwide. Investors must be wishing the plans to ban cryptocurrency in South Korea should never come to fruition.