Economy & Regulation
The government of South Korea held a meeting on Thursday to discuss measures to deal with the growing trend of cryptocurrency speculation. The regulators clarified the clampdown on virtual accounts as well as other measures to end anonymity. In addition, the Ministry of Justice suggested an even more extreme measure.
Clampdown on Virtual Accounts
Much of the discussions on Thursday centered on the subject of virtual accounts that are issued by banks for cryptocurrency exchanges. The government announced, according to Yonhap:
It [the government] is banning the use of anonymous virtual accounts in cryptocurrency transactions as part of efforts to curb virtual currency speculation.
This follows the regulators’ previous announcement on the virtual account clampdown that is part of the “emergency measures” on cryptocurrency regulation, which news.Bitcoin.com reported earlier this month. Even before the emergency measures were announced, banks anticipated the ban and already stopped issuing new virtual accounts, news.Bitcoin.com also reported. This would effectively put some exchanges out of business.
Hong Nam-ki, the minister of the Office for Government Policy Coordination, explained at the Thursday meeting, as reported by Yonhap:
Under the measure, only real-name bank accounts and matching accounts at virtual currency exchanges can be used for deposits and withdrawals, while the issuance of new virtual accounts to cryptocurrency exchanges will be banned…The Financial Intelligence Unit and the Financial Supervisory Service will carry out joint inspections to make sure that such real-name transactions will take root at an early date.
This announcement followed the government’s efforts to make banks identify virtual account owners. When the regulators released their emergency measures, they asked banks to confirm the identity of virtual account owners, as new.Bitcoin.com previously reported. However, banks said at the time that they could not comply, citing that they “only issue virtual accounts to the exchanges and do not know whom the virtual accounts are issued.”
To comply with the regulation in the future, banks are now building a system to identify virtual account owners in collaboration with the Korean Blockchain Association. The association has been working on self-regulation with 40 companies, including 14 crypto exchanges.
Ministry of Justice’s New Attempt
Despite repeated warnings by the government of the risks of cryptocurrency trading, Hong pointed out that:
Speculation has shown little signs of abating, with values of many cryptocurrencies excessively higher at home than abroad.
The Ministry of Justice, which heads the task force to spearhead regulations, has been a proponent of extreme measures. Earlier this month, the ministry suggested a blanket ban on cryptocurrencies in South Korea. However, this proposal was not adopted in the emergency measures.
During the Thursday meeting, Hong mentioned that the Justice ministry suggested “shutting down cryptocurrency exchanges.” However, the meeting’s minutes do not indicate whether other ministries support this idea.
Furthermore, Hong reiterated that the government will strengthen requirements of local exchanges to prevent money-laundering and toughen punishments for crypto-related crimes. The government will also put restrictions on cryptocurrency advertisements.
What do you think of the Korean government’s new attempts to discourage crypto trading? Let us know in the comments section below.
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