Regulators around the world are still debating how to address the risks posed by cryptocurrencies such as bitcoin, the world’s most popular virtual currency.
South Korea is considering a new law that would outlaw cryptocurrency exchanges in a bid to quell speculative frenzy and criminal transactions.
“The proposed shutdown of exchanges that the justice minister recently mentioned is one of the measures suggested by the justice ministry to curb speculation,” the Office for Government Policy Coordination announced on Monday.
In a separate announcement, Bank of Korea Governor Lee Ju-yeol told reporters that “cryptocurrency is not a legal currency and is not being used as such as of now.”
Both announcements, which came amid ongoing attempts by the US and Germany to clamp down on money laundering and related crimes, exacerbated volatility in the cryptocurrency markets, sending bitcoin prices tumbling, Reuters reported.
On Wednesday, bitcoin slid 18 percent, trading at $14,690.69 and selling at $11,750 on the Luxembourg-based Bitstamp exchange.
The world’s most popular virtual currency, bitcoin has recently had its rate going through the roof, soaring more than 1,700 percent last year alone.
The shift toward tighter regulation sparked a strong negative reaction from many South Koreans, with thousands signing a petition to stop a ban on cryptocurrency trading.
Faced with market confusion and angry reactions from local investors, the South Korean government has talked down the idea, saying no decision has yet been made regarding a possible shutdown of the country’s cryptocurrency markets.
READ MORE: South Korean PM Says Cryptocurrency Ban Impossible Without National Assembly