Sunday, February 5, 2023

Korea to Ban Anonymous Bitcoin and Digital Asset Trading Accounts

Korea to Ban Anonymous Bitcoin and Digital Asset Trading Accounts

Bitcoin and most digital asset prices dropped sharply this morning on rumors South Korea’s government was about to impose new restrictions on local exchanges. While the exact plans are still unclear, the country’s financial regulator did issue an official warning that “the bubble in bitcoin will burst later”.

Also read: Vitalik Buterin Says “I WILL” Leave Ethereum If Immaturity Continues

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Korea: No More Anonymous Crypto Trading

According to Reuters, the national government will ban anonymous cryptocurrency trading accounts, and “close virtual coin exchanges as suggested by the justice ministry”. The latter statement means regulators would simply have more discretion to shut down exchanges if it appears necessary.

The government also recognized that prices on Korean exchanges tended to be higher than elsewhere, and warned that excessive volatility could lead to large losses.

At least one minor news site in China reported that Korea was suggesting an outright ban on trading digital assets, which spread around social media. Bitcoin, which was recovering from its Christmas slump and once again approaching the $17,000 USD mark, suddenly fell back below $15,000.

The Korean news drew groans from the cryptocurrency community, weary after years of will-they-won’t-they-ban rumors emanating from China. Investors thought those days were over after China finally showed its hand — and ran most local exchanges out of the country.

Digital Assets Like the Dotcom Bubble

Korea’s Yonhap news agency also reported that Choe Heung-sik, governor of the Financial Supervisory Service (FSS), compared cryptocurrency in 2017 to the dotcom bubble of the late 1990s. Choe added the government had “no solution to the problem of bitcoin and other digital currencies” and that other governments faced a similar situation.

Korea SeoulAs China’s wild-west cryptocurrency trading image faded, a very similar one sprang up in Korea. Previously obscure exchanges like Bithumb and Coinone are among the most popular in the world. Bithumb, the world’s current #1, traded the USD equivalent of $911 million in Ripple XRP over the past 24 hours, and over $500 million in BTC.

Rules have been laxer in the country so far, enhancing the appeal. Exchanges in most major countries, like Japan, are now heavily regulated and/or monitored, with users subject to bank-level KYC scrutiny or more. Traders have also been warned they face capital gains taxes on their profits and must record transactions.

Yonhap said it was the government’s lack of official recognition for digital currencies that led to rampant and largely-unregulated trading there. That could change, however, if its attitude is indeed shifting.

Will governments begin to impose tighter restrictions on crypto trading in 2018? Let’s hear your thoughts.

Images via Pixabay, Yonhap

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