By
Chimamanda U. Martha
April 25th, 2024
Under the new regulation, traders will no longer be able to use anonymous bank accounts to sell and acquire virtual currencies via South Korean exchanges.
South Korea, one of the largest markets in terms of bitcoin trading volume, has announced a ban on anonymous transactions in digital currency. Starting January 30, traders will be able to invest into the cryptocurrency only if their name on the exchange matches their name on the bank account.
According to the vice-chairman of the Financial Services Commission (FSC), Kim Yong-Beom, the move will help to prevent money laundering and the use of virtual money by criminals and minors younger than 19. Once the measures come into effect, existing bank accounts for trading will no longer be available.
The price of bitcoin has dropped from $11,000 to as low as $10,179 following the announcement by FSC. The cryptocurrency has been highly volatile this month because of the rising concerns over how the government will regulate the high volume of trading. After reaching almost $20,000 in December, bitcoin dropped below $10,000 last week on worries over the possible ban on cryptocurrency trading in South Korea. On Tuesday, it recovered from its low to hit over $10,900 per coin.
According to South Korea’s authorities, a ban on trading the virtual currency on exchanges is still under consideration, and is not a final measure. “The government is still discussing whether an outright ban is needed or not, internally,” a government official told Reuters after Tuesday’s briefing.
The move follows multiple warnings by regulators in South Korea that they would crack down on speculative cryptocurrency trading. The lack of regulation has long been a major concern for local authorities who are seeking to eliminate the risks of tax evasion, money laundering, and other criminal activities involving the use of digital currencies.
A few days ago, the government announced its decision to collect corporate and local income tax from local exchanges on their yearly reported earnings as a “measure of tax enforcement”. South Korean trading platform will now be required to pay 24.2% of their local and corporate income tax. Furthermore, the financial authorities have recently claimed they will impose fines for traders who refuse to convert their virtual accounts into real-name ones.
Earlier this month, it was reported that some employees of the South Korean Financial Supervisory Service (FSS) were involved in cryptocurrency insider trading activity. According to reports, he bought 13 million won in cryptocurrency in July and managed to sell them for around 20 million won, gaining nearly 7 million won as a profit. The organization has already started investigating the case of illegal trading and promised to make all findings publicly available.