Bitcoin's Price Is Flopping on South Korea Cryptocurrency Crackdown

Finance: Here's why cryptocurrencies are getting smoked on Monday

Finance: Here's why cryptocurrencies are getting smoked on Monday

Cryptocurrency values have plummeted by €100billion after an influential website sparked panic by removing South Korean exchange prices from its rates.

That news from the justice minister comes after the country's largest cryptocurrency exchanges were raided by police and tax agencies this week for alleged tax evasion, people familiar with the investigation told Reuters.

South Korean cryptocurrency exchanges are some of the world's largest.

The clampdown in South Korea, a crucial source of global demand for cryptocurrency, came as policymakers around the world struggled to regulate an asset whose value has skyrocketed over the previous year.

Bitcoin's price dropped by 21 per cent in South Korea following the Justice minister's statement though the cryptocurrency still trades at a 30 per cent premium when compared to its price in other countries. It hit an all-time high of $830 billion earlier this month, according to data from CoinMarketCap.

The world's digital currency market is now valued at $27 billion, "which represents a level of value creation on the order of Silicon Valley success stories like AirBnB", according to a Global Cryptocurrency Benchmarking Study released previous year by the University of Cambridge's Centre for Alternative Finance. It was a move investors shook off after an intense sell-off.

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The Toronto Stock Exchange's benchmark Standard&Poor's/TSX Composite Index fell 71.29 points, or 0.44 percent, to 16,247.95. The Loonie closed at an average trading price of 80.03 cents United States , down 0.27 of a USA cent.

South Korea has been a hot market for cryptocurrencies. This is because many exchange sites do not allow any new accounts. According to Josiah Hernandez, chief strategy officer at Coinsource, that demand will make it hard for regulators to follow through on a full ban. He said his government is working on a bill that will effectively halt cryptocurrency trading in "domestic exchanges". "Governments like to know where the money is, who has it and what you're doing with it, in case you haven't noticed".

"Keen traders, especially hackers, will find it tough to cash out their gains from virtual coin investments in Korea but they can go overseas, for example Japan", Mun said.

With this news, many investors have started to sell the coins immediately.

Established in 2009 after the financial meltdown, Bitcoin is a digital currency that has no central bank or regulatory authority backing it up.

Financial Services Commission head Choi Jong-ku foreshadowed the impending wave of government involvement at a press conference on January 8.

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