Officials in South Korea have said they will ban cryptocurrency trading in the country, causing prices to plummet.

Cryptocurrencies such as Bitcoin and Ethereum are traded through exchanges, some of which have recently been raided by authorities after allegations of tax evasion.

The impact on the worldwide price of notable virtual currencies was immediate, with the price of Bitcoin dropping by 21% and Ethereum by 11% following remarks by Park Sang-ki, South Korea’s justice minister. A large sell-off took place after Park’s announcement.

South Korea is a major trading hub for cryptocurrency, and with most of the supply of Bitcoin coming from miners in Asia, the ban may have greater ramifications than if it was carried out elsewhere. 5% of all Bitcoin worldwide are traded against the South Korean won.

Park announced the ban, saying: “There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges.”

bitcoin price chart drop south korea

A chart showing Bitcoin’s price plummet (USD). Credit: TradingView

However, not long after this was announced, officials did note that the bill had not yet been finalised, and was instead a consideration rather than a concrete plan.

Though a ban is still not certain, the justice ministry commented that Park’s announcement came after discussions with other departments including the finance ministry and regulators, suggesting it has broad support.

Despite this further hit to cryptocurrencies, which have a history of severe volatility and government sanctions, it is likely that some enthusiastic traders will not be deterred.

“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,” said Mun Chong-hyun, chief analyst at EST Security.

Coinone and Bithumb, two of the country’s largest cryptocurrency exchanges, were recently raided by police following accusations of tax evasion. The government faces increasing difficulties over how it should regulate a rapidly growing market, which is beginning to approach traditional business indexes in size.

Such is the popularity of the currencies in the country that citizens have petitioned the government to stop the ban, temporarily causing its website to crash.