South Korean Government Imposes Stricter Rules on Cryptocurrency Trading, But Won’t Ban It

The government of South Korea announced in late December 2017 that it will introduce additional regulations to prevent speculation in the trading of digital currencies in the country.

The move is a realization of the previous reports stating that additional measures will be implemented to curb illicit activities at various virtual currency exchanges.

In a statement, a government spokesperson said that the trading prices of the majority of cryptocurrencies in the country’s exchanges were a lot higher than those in the exchanges in other countries. He added that the government had already announced several times that the virtual tokens cannot be used as actual currencies due to their extreme volatility.

“The government had warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility.”

Under the plan, the government will initially impose a ban on the opening of anonymous digital currency trading accounts. This directive, however, is expected to be easily met by the exchanges as majority of them already require a photographic proof of identity from their customers.

The second step is the introduction of a new law that will authorize regulators to shut down cryptocurrency exchanges if required. This move is reportedly recommended by the Justice Ministry.

Following the government’s announcement, several banks have implemented policies against virtual currencies. The major commercial banks Shinhan Bank and KB Kookmin Bank have announced that they will be abolishing their reward programs that enable clients to buy bitcoins with credit card bonus points.

Woori Bank and Korea Development Bank, meanwhile, have announced that they would be closing all virtual accounts provided to cryptocurrency exchanges.