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South Korea says it will ban anonymous cryptocurrency
accounts used for financial transactions.
New regulations set to take effect next week will
introduce a system to verify a person's identity before they
can make a crypto transaction.
Cryptocurrency exchanges will also be required to share
user data with local banks.
South Korea houses some of the world's largest
cryptocurrency exchanges and they have gone largely unregulated
until now.
South Korea has made moves to ban anonymous cryptocurrency
accounts from being used for financial transactions.
Financial authorities have already banned banks from offering
virtual accounts that are needed to buy or sell cryptocurrency.
New regulations set for next week will further the ban already in
place by introducing a system to verify a person's identity
before they can make a transaction.
Planned regulation also prevents foreigners and underage
investors from opening cryptocurrency accounts in South Korea,
Yonhap reported, citing financial officials.
South Korea's senior financial regulator Kim
Yong-beom told reporters that six South Korean banks will
begin issuing new trading accounts next week after the system is
implemented. Those banks include Shinhan Bank, NH Bank
and the Industrial Bank of Korea.
Existing crypto bank accounts not linked to verified users
will be banned on the same day, Kim said.
Officials also announced on Sunday that cryptocurrency
traders would be required to share user data with the banks,
according to Yonhap.
Newly proposed regulations would require banks to check whether
cryptocurrency exchanges comply with the new transparency
measures.
The government will also be able to access users' transaction
data through compliant banks, according to officials, which may
point to the government looking to enforce taxes on
cryptocurrency transactions.
Stricter trading regulations are part of a government
system to curb speculative investment into virtual money, as many
fear that the cryptocurrency bubble may soon burst. The
government also hopes to prevent the use of cryptocurrency in
illegal activity.
"Nobody, including the government, guarantees the value of
cryptocurrencies," Kim told reporters. "Given its highly volatile
nature, please be cautious when making investment
decisions."
South Korea houses some of the world's largest
cryptocurrency exchanges, although exchanges have gone largely
unregulated as they are not recognized as official financial
institutions.
Last week, authorities raided
the country's largest cryptocurrency exchanges on
suspicion of tax-dodging. As news broke of
the
government's plans to propose a ban on virtual currency
exchanges, the global cryptocurrency market
took a nosedive.
Many South Korean users took to
social media to express their anger, and posted photos of
doors, laptops and showers that had been broken in a
cryptocurrency-filled rage.
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