(Reuters) — South Korea’s justice minister stated on Thursday the federal government is making ready a invoice to ban cryptocurrency buying and selling, throwing the digital coin market into turmoil because the nation’s police and tax authorities raided native exchanges on alleged tax evasion.

The clampdown in South Korea, an important supply of worldwide demand for cryptocurrency, got here as policymaker around the globe struggled to control an asset whose worth has skyrocketed during the last yr.

“There are nice issues relating to digital currencies and justice ministry is principally making ready a invoice to ban cryptocurrency buying and selling via exchanges,” stated Park Sang-ki at a press convention, in response to the ministry’s press workplace.

A press official stated the proposed ban on cryptocurrency buying and selling was introduced after “sufficient dialogue” with different authorities companies together with the nation’s finance ministry and monetary regulators.

The nation’s largest cryptocurrency exchanges like Coinone and Bithumb had been raided by police and tax companies this week for alleged tax evasion. The raids comply with strikes by the finance ministry to establish methods to tax the market that has turn into as huge because the nation’s small-cap Kosdaq index by way of every day buying and selling quantity.

Park Nok-sun, a cryptocurrency analyst at NH Investment & Securities, stated the herd behaviour in South Korea’s digital coin market has stoked issues.

Indeed, Bitcoin BTC=BTSP’s 1,500 % surge final yr has stoked big demand for cryptocurrency in South Korea, drawing school college students to housewives and sparking worries of a playing dependancy.

“Virtual cash commerce at a hefty premium in South Korea, and that’s herd behaviour displaying how robust demand is right here,” Park stated. “Some officers are pushing for stronger and stronger laws as a result of they solely see extra (buyers) leaping in, not out.”

Bitcoin sank on Monday after web site CoinMarketCap eliminated costs from South Korean exchanges, as a result of cash had been buying and selling at a premium of about 30 % in Asia’s fourth largest economic system. That created confusion and triggered a broad selloff amongst buyers.

According to Coilhils.com, the worth of Bitcoin dropped greater than 4 % to 20.3 million received ($18,968.42) after the minister’s feedback from early Thursday. The native worth nonetheless trades at over a 30 % premium in comparison with different nations. Bitcoin was down greater than 10 % on the Luxembourg-based Bitstamp at $13,350 BTC=BTSP, after earlier dropping as little as $13,120, its weakest since January 2.

An official at Coinone informed Reuters that a couple of officers from the National Tax Service raided the corporate’s workplace this week.

“Local police even have been investigating our firm since final yr, they suppose what we do is playing,” the official, who spoke on situation of anonymity, stated and added that Coinone was cooperating with the investigation.

Bithumb, the second largest digital forex operator in South Korea, was additionally raided by the tax authorities on Wednesday.

“We had been requested by the tax officers to reveal paperwork and issues yesterday,” an official at Bithumb stated, requesting anonymity as a result of sensitivity of the problem.

South Korean monetary authorities had beforehand stated they’re inspecting six native banks that supply digital forex accounts to establishments, amid issues the rising use of such property might result in a surge in crime.

This article sources data from VentureBeat