It was only a matter of time until authorities pulled the reins in on one of the biggest crypto trading nations in the world. South Korea, which is responsible for as much as 25% of total crypto trading volume, said on Thursday it will impose additional measures to regulate speculation in crypto within the country.
South Korea Will Ban Anonymous Crypto Trading
As previously reported that more regulations are expected, South Korean regulators have confirmed additional measures to curb illegal activities at cryptocurrency exchanges. According to Reuters, the government noted that trading prices of most digital currencies were much higher on South Korean exchanges than they were on exchanges in other countries.
A government spokesperson made the following statement:
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.
The first steps will include a ban on opening anonymous crypto trading accounts. Most exchanges require photographic proof of identity anyway, so this regulation is nothing to be concerned about.
Secondly, however, is a more alarming plan to introduce new legislation which will allow regulators to close virtual coin exchanges if required. This measure had been recommended by the justice ministry, according to the statement.
Previously, South Korea had announced a plan to tax capital gains from cryptocurrency trading to tackle what it perceives as the risk of excessive speculation.
Banks Backing Off
As expected, earlier this week, two major banks in South Korea announced that they are closing reward programs, which allow clients to purchase bitcoins with credit card bonus points.
Commercial banks in the country are increasingly preventing the opening of new virtual accounts, which are necessary to trade on South Korean crypto exchanges.
In addition to Shinhan Bank and KB Kookmin Bank closing rewards programs next month, Woori Bank and Korea Development Bank also announced that they would be closing all virtual accounts provided to exchanges.
It is no surprise that banks in South Korea and elsewhere are pulling back from crypto; the concept essentially goes against their business model. Unfortunately, in this embryonic industry, traders still need to rely on exchanges, many of which, such as Coinbase, have adopted banking-style models of fees and commissions. Only when crypto trading is truly decentralized and peer-to-peer will the masses start to benefit more than the banks and exchanges.
Will the Korean clampdown affect the markets? Add your thoughts to the comments below.
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