$80 Billion Exits Crypto Market Amid South Korean Jitters, but Seoul Is Not Banning Cryptocurrency
Headlines about a ‘pending ban’ on cryptocurrency trading in South Korea triggered a mass exodus from the asset class on Thursday, with roughly $80 billion flowing out of the market. Of course, the East Asian country has not actually banned crypto exchanges, but is considering a host of measures to stamp out anonymous trading.
Not So Fast
Reuters brought some much needed clarity to the situation early Thursday in an article that cited a spokesperson at the presidential office.
“Justice Minister Park’s comments related to shutdown of cryptocurrency exchanges is one of the measures prepared by the Ministry of Justice, but it’s not a measure that has been finalized,” the person said.
Several news outlets had earlier implied that the decision was already made, and that Seoul was getting ready to ban all domestic crypto exchanges. New proposed legislation in South Korea seeks to ban anonymous accounts and prevent financial institutions from settling transactions for unidentified cryptocurrency trades. That’s very different from a blanket ban on cryptocurrency trading.
The central government in Seoul also warned that the digital asset class could be “vulnerable to the damage from investment fraud or hacking attacks on the exchanges.”
Local media outlet Yonhap News agency also provided more clarity on the matter:
“Under the new measure, only real-name bank accounts and matching accounts at cryptocurrency exchanges can be used for deposits and withdrawals, while the issuance of new virtual accounts to cryptocurrency exchanges will be banned.”
Crypto Market Declines
Although South Korea has not implemented anything as harsh as some media outlets have reported, investors clicked the panic button on Thursday, resulting in a brisk selloff of most major coins. At the time of writing, only five of the top 100 virtual currencies had were trading neutral or positive, according to data provider CoinMarketCap.
The majority of coins in the top 100 were down double digits, sending the total market cap to as low as $626 billion. At the start of trading Thursday, the total market cap of all coins was nearly $735 billion.
At press time, the total market cap was roughly $656 billion.
Bitcoin was off more than 10%, while Ethereum and bitcoin cash each fell more than 12%. Other big losers included Cardano, Litecoin, IOTA and Tron, each of which declined more than 12% (all figures according to CoinMarketCap).
Naturally, investors have something to fret about when South Korean regulation is in the headlines. The country has quickly emerged as a major force in the cryptocurrency market, and is responsible for a huge percentage of daily trade volumes. That being said, many crypto traders feel the need to navigate away from mainstream media sources when it comes to crypto news.
Litecoin founder Charlie Lee poked fun at mainstream media’s tendency to exaggerate the perils of cryptocurrency in a tweet earlier in the day:
“Korea bans Bitcoin FUD is the new China bans Bitcoin FUD.”
FUD stands for fear, uncertainty and doubt.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.