South Korea bans banks working with Bitcoin

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On Wednesday (December 13th) South Korea banned its financial institutions dealing with virtual currencies, such as Bitcoin. This is due to the fact that Bitcoin’s growth rate is speculative.

Around a million South Koreans, many of whom are short-term investors own Bitcoin; the demand for Bitcoins is so high that the price per Bitcoin is about 20% higher than in the US where the Bitcoin trade is the largest. This year, world prices for bitcoins have grown all over the world, from less than 1,000 USD per Bitcoin in January to 17,000 USD today.

The Prime Minister stated that Seoul would forbid financial institutions from dealing with virtual currencies, including buying, owning or retaining them as collateral. However in practice it has not managed to suspend the use of Bitcoin in the calculations. Thus, the government has seen it appropriate to globally prohibit the use of Bitcoin, and tax the profits from such transactions.

Prices for Bitcoin, the largest variable currency in South Korea, fell by almost 5% after the announcement.