South Korea’s regulators are pushing cryptocurrency traders and exchanges to follow Know-Your-Customer (KYC) procedures to curtail money laundering and other crimes.
In a significant development surrounding bitcoins and such cryptocurrencies, from January 30, South Korea will ban the use of anonymous bank accounts for trading in cryptocurrencies.
The move is designed to bring to bring an end to cryptocurrencies for the purpose of money laundering and other crimes.
The move piles on top of existing efforts by South Korea to temper its citizen’s obsession with cryptocurrencies.
South Koreans, including college students, housewives, office workers, etc have rushed in to invest in the cryptocurrencies market despite warnings from global policymakers on the risks of doing so since it lacks broad oversight.
Following this announcement, the price of bitcoins in South Korea extended their loss and were down by 3.34% at $12,699 as of 0409 GMT, according to Bithumb.
Across the globe, policy makers are calling for a coordinated tougher regulations on trading in cryptocurrencies.
Last week, the country’s chief financial regulator stated that the government may consider shutting down domestic virtual currency exchanges.
South Korea’s Presidential office has clarified that the ban on trading in virtual currencies 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,” said a government official on the condition of anonymity after Tuesday’s briefing.
In the last few months, the difference in statements by the governments and that of the Justice Ministry, which has taken a more hardline approach, show a reluctance on the regulator’s part to enforce an outright ban.
From January 30, traders of cryptocurrencies will not be allowed to make deposits into their virtual currency exchange wallets unless their names in the cryptocurrency exchanges and the one mentioned in their bank accounts match, said Kim Yong-beom, vice chairman of the Financial Services Commission.
“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.
South Korea’s regulators have previously said, once local banks have gone through with their KYC norms, trade in cryptocurrencies is likely to be allowed.
Cryptocurrencies exchanges and local banks have to complete their KYC norms by January 30.