30th Jan, The Day South Korea Bans Anonymous Cryptocurrency Trading

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Credit: iStock.com/BackyardProduction

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, the 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 their real name bank accounts from January 30, to continue trading in virtual currencies. When this rule comes into effect, investors would be able to deposit funds for cryptocurrency trading only if their name on the crypto exchange matches with their name on the bank account. (Source: South Korea Announces Deadline for Halt of Anonymous Crypto Trading, January 23, 2018)   

The move is significant as South Korea is one of the major centers of crypto trading in the world, growing by leaps and bounds. And the recent crackdown by the government just put a brake on its speed.

Warnings of this nature had been circulating in media for long. And the resulting uncertainty had taken a toll on the top cryptocurrencies like Bitcoin, Ethereum and Ripple XRP. Earlier, the news of South Korea ban had come in after the authorities inspected few crypto exchanges and banks for KYC/AML compliance. The justice minister Park Sang-Ki had gone so 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 regulating the crypto market.

And few of these regulations that were being talked about were – use of real name for trading cryptos, prohibiting minors and foreigners from opening accounts and introducing taxes on crypto transactions. The current news of 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 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 onto the crypto wagon in order to get rich quick – a step which 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 cryptomarket to recover, it might be a step in the right direction once the dust settles.