In a continuation of its regulatory machinations, the South Korean government has unveiled its latest cryptocurrency legislation. With its sights set once again on exchanges, officials want to curb the use of anonymous accounts and increase their control over exchanges overall. Perhaps in response to the news, the cryptocurrency markets fell overnight, with Bitcoin slumping 10%.
South Korea Says No to Anonymity
As originally reported by Reuters, South Korean officials have taken yet another regulatory approach to temper crypto enthusiasm among its citizens. On Thursday, the government announced that it would place a ban on anonymous trading accounts. The ban, which is to take effect next month, is another attempt to protect investors from what the government sees as wild speculation and a volatile market.
“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 South Korean government said in an official statement.
These warnings look to suppress buyer speculation in a country whose population is crazy for crypto. A recent survey found that nearly 1 in every 3 working Koreans owned some stake in cryptocurrency. Such widespread interest and related speculation have led to price premiums on Korean exchanges that are anywhere from 15% to 20% higher than the global average.
In a followup statement, the government added, “Officials share the view that virtual currency trading is overheating irrationally … and we can no longer overlook this abnormal speculative situation.”
Government Wants More Control Over Exchanges
In banning anonymous accounts, officials hope to eliminate fraud in the crypto space and tackle money laundering, a practice that has become popular in the unregulated market. In its statement, the government vowed to “resolutely respond to such crimes by slapping maximum sentences possible on offenders.”
In addition, the new regulation will “leave all policy options open, including closure of a cryptocurrency exchange when deemed necessary.”
This last point is perhaps the hardest-line position the South Korean government has taken against exchanges in this regard. Officials in South Korea have been among the most proactive in the world in setting up regulatory frameworks for the budding crypto economy, and they’ve rolled out a number of proposals and bills in the past month alone to accommodate these fledgling markets.
With each new effort, though, it seems as though the government is inching towards enhanced control over a phenomenon that, since its inception, has stood firmly against centralized control.
But regulators likely wish to make investing safer for the general public, and these new measures come right after authorities conducted onsite inspections of popular domestic exchanges. These inspections were in response to a series of hacking attacks that have crippled Korean exchanges this year, leaving one such exchange, Youbit, in the throes of bankruptcy.