Business / Financial Markets

South Korea to ban cryptocurrency traders from using anonymous bank accounts

Reuters

South Korea on Jan. 30 will ban the use of anonymous bank accounts in cryptocurrency trading, regulators said Tuesday in a widely telegraphed move designed to stop virtual coins from being used for money laundering and other crimes.

The measure comes on top of stepped up efforts by Seoul to temper South Koreans’ obsession with cryptocurrencies.

Everyone from housewives to college students and office workers have rushed to trade in the market despite warnings from global policymakers about investing in an asset that lacks broad regulatory oversight.

The price of bitcoins in South Korea extended their loss following the latest regulatory announcement, according to Bithumb, the country’s second-largest virtual currency exchange.

Bitcoin slumped nearly 20 percent last week to a four-week low on the Luxembourg-based Bitstamp exchange, pressured by worries over a possible ban on trading the virtual asset in South Korean exchanges. In Tuesday afternoon trading, it was up 5.4 percent at $10,925.

Policymakers around the world are calling for tougher, coordinated regulation of cryptocurrency trading. South Korea’s chief financial regulator said last week the government may consider shutting down domestic virtual currency exchanges.

The South Korean presidential office has clarified that an outright ban on trading on virtual currency exchanges is only one of the steps being considered, and not a measure that has been finalized.

“The government is still discussing whether an outright ban is needed or not, internally,” a government official who declined to be named said after Tuesday’s briefing.

Over the past month, government statements have underscored differences between the justice ministry, which has pushed for a more hard-line approach, and regulators who have shown a reluctance to enforce an outright ban.

Starting Jan. 30, cryptocurrency traders in South Korea will not be allowed to make deposits into their virtual currency exchange wallets unless the name on their bank accounts matches the account name in cryptocurrency exchanges, Kim Yong-beom, vice chairman of the Financial Services Commission, told a news conference in Seoul.

“Everyone knew this was coming, as the government already said they will enforce the real-name system before. Rather, I can see this as a chance to go in, not out. I don’t see any reason to take my money out,” said a local bitcoin investor who only agreed to be identified by his family name, Ahn.

The regulator has previously said it will come up with detailed guidelines for local banks to properly identify its clients by their real names in cryptocurrency transactions.

To make deposits into virtual coin wallets, cryptocurrency traders will need to identify themselves with their real names at the exchange and have those matched with information at local banks by Jan. 30.

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