SEOUL – South Korea launched on Tuesday measures to ban trading in cryptocurrencies using anonymous bank accounts to curb money laundering and other illegal activities at a time when the United States is making efforts to regularize these markets.
Beginning Tuesday, the South Korean investors will not be able to make transactions in their virtual portfolios unless the name in the cryptocurrency account matches the name in the bank accounts with which they are associated, Yonhap news agency reported.
According to the measures that came into force on Tuesday, the so-called “anonymous accounts” (which do not have real names or do not correspond to the bank account) used for cryptocurrency trading will remain disabled, the Financial Services Commission said in a statement released on Jan. 23.
The regulation, which also prevents foreigners from cryptocurrency trading in South Korea, is part of the measures announced by the Seoul government to curb money laundering and excessive speculation in the cryptocurrency markets of the country.
About 3 million people in South Korea are estimated to have invested in cryptocurrencies, according to Yonhap.
Cryptocurrencies like Bitcoin and Ethereum have rapidly gained popularity among South Korean investors.
The new regulation requires cryptocurrency exchange operators to share the investors’ transaction data with the banks, something that could allow Seoul to impose taxes on these transactions in the future.
The South Korean government has hinted at the possibility of collecting taxes from investors, and banning the trading of cryptocurrencies, a market that is barely regulated in the Asian country.
The enactment of the law comes the same day as the Japanese Finance Minister, Taro Aso, stressed the need to strengthen controls over exchange houses after a Tokyo-based operator reported an apparent theft of cryptocurrencies worth 430 million euro ($531.8 million) on Friday.
South Korean cryptocurrency markets, such as Bithumb, Tuesday released an explanatory message about the new regulation on its home page and showed declines of around 3 percent for Bitcoin or Ethereum against the dollar.
The fall gives rise to the possibility of banks rejecting transactions with small exchange houses in order to avoid violation of the new law and accept doing so only with the main local exchange sites such as Bithumb or Upbit.