Anger is in the air in South Korea after a shambolic episode started by Justice Minister Park Sang-ki who told a press conference in no unclear terms:
“The ministry is preparing legislation that basically bans any transactions based on a virtual currency through the trading floor. We have grave concerns about (the craze over) crypto currency and (a shutdown) would be one of the goals we are aiming for.”
A sell-off ensued with ethereum hit hardest, down 10%, but angry South Koreans begun petitioning the Blue House (South Korea’s White House) demanding a halt of the proposed crackdown.
In the meantime, Reuters reports South Korean exchanges were raided. “We were asked by the tax officials to disclose paperwork,” an official at Bithumb told them.
The Blue House site went down temporarily as all eyes turned to the presidency for clarification on the matter.
“The Justice Minister Park Sang-ki’s remarks that the virtual currency exchange will be closed is not coordinated by the government,” the Presidency said before adding:
“Park’s remarks are the position of the Ministry of Justice and that other ministries have various positions.
The Ministry of Justice approached from the dimension of elimination of speculation, but the Financial Services Commission said that the Ministry of Science, Technology and Communication is interested in fostering core technologies of virtual money.
Virtual currency-related policies will determine the best time for policies to take effect while looking at market conditions.”
It is unclear whether this is the government backing down or whether Park acted unilaterally. There are now calls for his resignation.
Crypto has seen a boom in South Korea with their biggest company, Samsung, involved in a number of blockchain related projects.
They have a huge premium over western trading due to protectionist laws that require South Korean internet ID to sign up with South Korean exchanges.
Arbitrage therefore is difficult to almost impossible, with prices there far more expensive than in the west, indicating considerable demand which coincided with China’s crypto ban last year.
It may be that some of China’s demand now moves through South Korea, with estimates suggesting there are 2-5 million South Korean crypto enthusiasts.