The value of bitcoin plunged 13.5% in the early hours of Thursday after news hit that South Korea is planning to ban cryptocurrency trading. News of the ban follows the raiding of local cryptocurrency exchanges by police and tax authorities over alleged tax evasion, as one of the key nations driving the demand for bitcoin and other virtual currencies attempts a clampdown. “There are great concerns regarding virtual currencies and [the] justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” justice minister Park Sang-ki said.

The news sent bitcoin prices tumbling $2,000 from midnight UK time from a high of $14,890, according to data from Coinbase, before beginning to recover in the early hours of the morning. In South Korea, where bitcoin trades at around a 30% premium compared to other countries, the local price plunged as much as 21% after the minister’s comments. Once a bill is drafted, legislation for an outright ban of virtual coin trading within South Korea will require a majority vote of the total 297 members of the National Assembly, a process that could take months or even years.

Once enforced, South Korea’s ban “will make trading difficult here, but not impossible,” said Mun Chong-hyun, chief analyst at EST Security. “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.(theguardian)…[+]