It has been hardly two weeks since the news of a probable ban by South Korea on its crypto exchanges had rattled the markets. Today is another such day. As far as one can see on screen, cryptocurrencies are drowning in red. Although it was not entirely unknown this time, South Korea has clearly sent the message that anonymous cryptotrading must stop. And cryptos are being hit because anonymity is one of the major draws to the cryptoworld.
South Korea has announced the deadline by which anonymous cryptocurrency trading accounts must be banned. The Financial Services Commission (FSC) has stated that crypto investors will be required to use real-name bank accounts from January 30 to continue trading in virtual currencies. (Source: “South Korea Announces Deadline for Halt of Anonymous Crypto Trading,” CoinDesk, January 23, 2018.)
When this rule comes into effect, investors will be able to deposit funds for cryptocurrency trading only if their name on the crypto exchange matches their name on their bank account.
The move is significant as South Korea is one of the major centers of cryptotrading in the world, growing by leaps and bounds. And the recent crackdown by the government just put the brakes on its speed.
Warnings of this nature had been circulating in the media for a long time and the resulting uncertainty had taken a toll on the top cryptocurrencies like Bitcoin, Ethereum, and Ripple XRP.
Earlier, the news of a South Korea ban had come in after the authorities inspected a few crypto exchanges and banks for know-your-customer (KYC) and anti-money laundering (AML) compliance. South Korean Justice Minister Park Sang-Ki had gone as far as saying that the ministry was preparing a bill to ban crypto trading through exchanges. However, it was later clarified that the government was keen on simply regulating the crypto market, not banning it outright.
A few of the regulations being talked about included the use of real names for trading cryptos, prohibiting minors and foreigners from opening accounts, and introducing taxes on crypto transactions. The current news of a South Korea ban just follows up on these measures, which had been in works for a long time.
The South Korea ban and the resulting changes stem from the government’s concern that digital tokens are being used for speculation, money laundering, and other such activities. The authorities are also concerned about how common investors are jumping on the crypto bandwagon in order to get rich quickly—a step that might end up in huge losses instead of gains.
Right now, major crypto exchanges are working to enforce the new rule. While it may take some time for the cryptomarket to recover, it might be a step in the right direction once the dust settles.