South Korea Tightens Crypto Net

The South Korean government has been among the loudest voices of concern about a possible speculative bubble in the largest cryptocurrency, which is still up about 1 500% for the year. Hong said that under the new measure, only real-name bank accounts and matching accounts at cryptocurrency exchanges can be used for deposits and withdrawals, while the issuance of new virtual accounts to cryptocurrency exchanges will be banned.

Earlier this week, in another move to curb money laundering, and other suspicious activities related to digital currency trading, South Korea said it would also ban financial firms from dealing in Bitcoin and other virtual currencies. This follows a huge uptick in trading within the nation, that itself coming at a time when bitcoin's value has skyrocketed to, at one point, more than $19,000 Dollars.

"I think regulators have done what they're supposed to do", Cedric Jeanson, a former JPMorgan trader and founder of the bitcoin-focused hedge fund BitSpread, said of Korea's latest measures in an interview on December 28. It will also introduce a new legislation to allow regulators to shut down all digital currency exchanges if needed.

The new regulations are tricky for a number of reasons, not least of which because they will do away with one of the alluring features cryptocurrencies offer: Anonymity. This highlights a huge local obsession relating to cryptocurrencies within the South Korean population.

"It's really tricky for the government", said S.G. Lee, chairman of the Korean Fintech Industry Association.

These warnings look to suppress buyer speculation in a country whose population is insane for crypto. The South Korean government hopes to cool things down by making it clear to investors that they will, if necessary, crack down hard on cryptocurrencies. TechCrunch reports South Korean crypto exchange YouBit folded just last week after losing $35 million.

  • Eleanor Harrison