South Korea bitcoin ban: Panic after officials flirt with total trading clampdown

The value of numerous forms of digital currency is tumbling after South Korea, a hotbed for currencies such as bitcoin, said it was weighing up a trading ban.

The country's justice minister Park Sang-ki said on Thursday (11 January) that South Korea planned to ban cryptocurrency trading.

But in a conflicting statement the presidential office said later that a ban was merely under review and that no policy changes had been made.

"There are great concerns regarding virtual currencies and the justice ministry is preparing a bill to ban cryptocurrency trading through exchanges," Park told a news conference, according to Reuters.

The justice ministry has taken the sternest stance on digital currencies among the nation's ministries. Other South Korean agencies oppose an outright ban.

Amid the confusion, bitcoin slid 8%, to $13,698, according to statistics provided by Coindesk. Ethereum, another popular digital currency, fell 2.1%, to $1,222.

The comments were the catalyst for a major sell-off, which came as South Korean police started conducting raids on local cryptocurrency exchanges accused of tax evasion.

"We were asked by the tax officials to disclose paperwork," an employee of Bithumb, one of the targeted operations, told Reuters.

Bitcoin is only one form of cryptocurrency but remains the most popular around the world.

Not all countries have accepted its recent spikes in value. Most recently, officials from China, Russia and the UK spoke out and warned of pending legislation.

David Johnson, CEO of cryptocurrency platform Latium, told IBTimes UK: "This move from the justice minister will no doubt have an impact on the market. As with all markets, fear is a huge driving force.

"However, fear is always short-lived and replaced quickly by the feeling of opportunity.

"We have seen this before when China announced banning ICOs and halting trading in September, the market sold off quickly only to make all-time highs shortly after.

"No single country dictates the crypto market long-term. Announcements like this create short-term panic but the demand is too high to keep the markets down for long."

In December, the House of Commons Treasury select committee member and Labour MP John Mann said that urgent changes were needed to stay ahead of modern threats to society.

"These new forms of exchange are expanding rapidly and we've got to make sure we don't get left behind – that's particularly important in terms of money laundering, terrorism or pure theft," he said.

"It would be timely to have a proper look at what this means."