- South Korea says it will ban anonymous cryptocurrency accounts used for financial transactions.
- New regulations set to take effect next week will introduce a system to verify a person’s identity before they can make a crypto transaction.
- Cryptocurrency exchanges will also be required to share user data with local banks.
- South Korea houses some of the world’s largest cryptocurrency exchanges and they have gone largely unregulated until now.
South Korea has made moves to ban anonymous cryptocurrency accounts from being used for financial transactions.
Financial authorities have already banned banks from offering virtual accounts that are needed to buy or sell cryptocurrency. New regulations set for next week will further the ban already in place by introducing a system to verify a person’s identity before they can make a transaction.
Planned regulation also prevents foreigners and underage investors from opening cryptocurrency accounts in South Korea, Yonhap reported, citing financial officials.
South Korea’s senior financial regulator Kim Yong-beom told reporters that six South Korean banks will begin issuing new trading accounts next week after the system is implemented. Those banks include Shinhan Bank, NH Bank and the Industrial Bank of Korea.
Existing crypto bank accounts not linked to verified users will be banned on the same day, Kim said.
Officials also announced on Sunday that cryptocurrency traders would be required to share user data with the banks, according to Yonhap.
Newly proposed regulations would require banks to check whether cryptocurrency exchanges comply with the new transparency measures.
The government will also be able to access users’ transaction data through compliant banks, according to officials, which may point to the government looking to enforce taxes on cryptocurrency transactions.
Stricter trading regulations are part of a government system to curb speculative investment into virtual money, as many fear that the cryptocurrency bubble may soon burst. The government also hopes to prevent the use of cryptocurrency in illegal activity.
“Nobody, including the government, guarantees the value of cryptocurrencies,” Kim told reporters. “Given its highly volatile nature, please be cautious when making investment decisions.”
South Korea houses some of the world’s largest cryptocurrency exchanges, although exchanges have gone largely unregulated as they are not recognized as official financial institutions.
Last week, authorities raided the country’s largest cryptocurrency exchanges on suspicion of tax-dodging. As news broke of the government’s plans to propose a ban on virtual currency exchanges, the global cryptocurrency market took a nosedive.
Many South Korean users took to social media to express their anger, and posted photos of doors, laptops and showers that had been broken in a cryptocurrency-filled rage.