South Korea Officially Bans Anonymous Cryptocurrency Accounts
After much speculation, the government of South Korea has officially banned the use of anonymous bank accounts in cryptocurrency trades, Seoul’s financial regulator announced Tuesday.
The End of Anonymous Trading
As of Jan. 30, the use of anonymous bank accounts to fund cryptocurrency trades will be outlawed in South Korea. Under the new law, residents will not be allowed to make deposits into their cryptocurrency accounts unless the name on their bank account matches the name in the digital exchange.
Practically speaking, this means traders must link their virtual currency wallets with their bank accounts using their real name. This is similar to the KYC standard used in the United States to verify clients and fight money laundering.
By banning anonymous trading, regulators hope to put a cap on speculation in a market that has ballooned significantly in just over a year. South Korea is considered to be the world’s third-largest cryptocurrency market, behind Japan and the United States.
On Monday, local news agencies reported that the government has levied heavy taxes on domestic cryptocurrency exchanges, including a 24.2% tax on income generated on these platforms.
Bithumb, one of the nation’s largest exchanges, is expected to fork over 60 billion won in taxes.
Earlier this month, South Korean Justice Minister Park San-ki sparked a global selloff in cryptocurrencies after he implied that a comprehensive ban on digital assets was imminent. However, the president’s office later clarified that a ban was just one measure being considered and that a decision had not yet been finalized. That didn’t stop the selloff from intensifying, culminating in a more than $300 billion drop between Jan. 13-17.
At its lowest this month, the global cryptocurrency market was valued at $417 billion, roughly half of the record high. Bitcoin and most major altcoins recovered over the weekend before facing renewed pressures on Monday.
The market was down again on Tuesday, although weakness was observed long before news broke of new regulations.
It remains to be seen whether South Korea will implement additional measures to limit the amount of speculation in the market. However, an all-out ban appears unlikely at this point. Even if it were implemented, there’s very little stopping local traders from shifting their accounts offshore to a more favorable jurisdiction.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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