South Korea’s Financial Services Commission has announced it will be banning cryptocurrency anonymity from Tuesday January 30 as the government begins to crack down on money laundering within crypto markets.
The real-name registration system means that any anonymous holders of cryptocurrency wallets based in South Korea must now link them to bank accounts in their own name at one of six authorised banks, in order to confirm their identity. A similar scheme called Know Your Customer already exists in the United States.
As part of the new rules, underage investors will no longer be able to own or trade crypto. Forbes have reported that foreign customers – including those based in Korea – will also be prohibited from trading cryptocurrencies in the Asian nation, though there has been no word on those currently in possession of accounts or currency and whether they will have to sell by the deadline.
The South Korean government has also instructed financial organisations to monitor cryptocurrency trading over 10 million won ($9,338) per day or 20 million won ($18,676) per week, especially from larger organisations. The requirements also give banks new powers, including the ability to refuse to open accounts with cryptocurrency exchanges that don’t disclose information about suspicious or fraudulent trading.
The new rules are the start of a move to bring cryptocurrencies in line with other regulated markets, with taxes expected to follow in the coming weeks and months. The result is that it makes crypto trading more legitimate, but it has made a lot of people unhappy. South Korea’s economy is slowing down, and youth unemployment is three times the national average. The tech-savvy generation has jumped on the cryptocurrency bandwagon and profited from the rapid growth in value, but now they fear losing out.
South Korea accounts for 15% of global cryptocurrency trading (Japan 44%, USA 32%) and at present anyone anywhere in the world can buy from a South Korean crypto exchange. The new legislation saw Bitcoin lose 11% value initially and all bar one of the top 25 cryptocurrencies followed suit, losing between 10-15% in value. Prices have since recovered with the current weak state of the US Dollar, but analysts are predicting more price drops when the deadline comes around.