Following weeks of rumors, South Korea has finally decided to officially ban anonymous cryptocurrency trading accounts. As reported by Reuters, the decision to enact the ban was made as part of an effort to curb illegal activities associated with cryptocurrency, including money-laundering and tax evasion.
According to Kim Yong-beom, vice chairman of the Financial Services Commission, the new rules state that crypto traders in South Korea will not be able to make deposits onto exchanges unless the name associated with the exchange account matches the name on the trader’s bank account.
Local source YonHap News reported that crypto exchanges have not supported the opening of any new accounts for several weeks as a result of the circulation of rumors related to the ban.
In the same report, YonHap said that six banks (including Shinhan Bank, NH Bank, and the Industrial Bank of Korea) are now supporting the creation of accounts intended specifically for cryptocurrency trading.
The Saga Began in Late December
The rumours of a ban on anonymous cryptocurrency trading began circulating in late December, prompting the price of Bitcoin to take a significant hit. At the time, South Korea was responsible for an estimated 20% of the world’s BTC trading volume; South Korean Prime Minister Lee Nak-yeon had previously called his country’s cultural obsession with Bitcoin a “serious pathological phenomenon.”
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After several weeks of inaction related to the ban, South Korean Justice Minister Park Sang-Ki said that the proposed ban had been conceptualized as a way to mitigate “great concerns regarding virtual currencies” on January 11. Following his statement, Bitcoin took another significant hit in valuation, falling from around $15,000 to roughly $13,350 in less than 24 hours.
Half of the cryptocurrency community panicked, while the other half decried the statement as FUD: a rumor intended to negatively affect the price of Bitcoin by spreading fear, uncertainty, and doubt.
Indeed, just the next day, a spokesperson from the South Korean Presidential Office clarified: “Justice Minister Park’s comments related to the shutdown of cryptocurrency exchanges is one of the measures prepared by the Ministry of Justice, but it’s not a measure that has been finalized.”
Then, Korean regulators from the South Korean Financial Supervisory Service were placed under investigation for insider trading in relation to the ban rumors around January 18.
Now, however, it seems that the jig is up; the confusion around the legality of cryptocurrency trading in South Korea has been clarified. While this regulation may prove to be a positive thing for the legal hygiene of the cryptocurrency community and the financial stability of the crypto markets in the long-term sense, we’re likely to be seeing a lot of red in the short term.