South Korea Tightens up Policy on Bitcoin and Cryptocurrencies

Bitcoin along with other cryptocurrencies are getting the attention of many Asian regulators today. Asia is considered as a center of cryptocurrency trading. In fact, it isn’t surprising why regulators from the region are now taking necessary steps to taper the Wild West environment of cryptocurrencies.

Bitcoin fell by 11% after South Korea mentioned on Thursday that it would ban anonymous virtual currency trading. Over the years, digital currencies have enjoyed anonymity. However, given the possibility that it could be used for illicit activities, it isn’t surprising why countries like South Korea are now becoming strict when it comes to virtual currency investors.

This announcement was made after South Korea was named as a hotbed of cryptocurrency trading not only in Asian region but all over the world. South Korea accounts for around 20% of Bitcoin transactions worldwide.

Repercussions of South Korea’s New Policy?

The new rule that has been announced by the South Korean government would ultimately mean a ban on opening anonymous cryptocurrency accounts. This means that the government could actually monitor who is holding how much cryptocurrencies. South Korea is firm with its move as it has threatened to close virtual currency exchanges if necessary.

In a government statement, “officials share the view that virtual currency trading is overheating irrationally”. In addition to this, they mentioned that the government can no longer overlook the situation.

So what happens to the anonymous accounts? According to the officials, anonymous accounts will be closed by next month.

There are a number of things that influenced South Korea from making the move. One, it is South Korea’s effort to curb money laundering activities and financial fraud. This includes price manipulation using digital currency trades.

South Korea two weeks ago announced that financial firms are banned from dealing in digital currencies. This was after Bitcoin’s price soared fearing that it is actually a bubble waiting to burst.

How Many Koreans Support Virtual Currencies?

There are around one million South Koreans are estimated to own Bitcoin. Many of these individuals are actually small-time investors. In fact, the demand is quite high considering the price per unit of Bitcoin in South Korea is 20% higher than that in the US.

Security Concerns

There are many concerns regarding cryptocurrencies. One of which is cybersecurity. Youbit exchange was the first South Korean cryptocurrency exchange that closed after a hacking incident that took 17% of its assets.

South Korean Government Isn’t Alone

The South Korean government isn’t alone in its view against cryptocurrencies. In fact, despite the fact that Japan is accepting cryptocurrencies more openly, Bank of Japan governor Haruhiko Kuroda mentioned that the price surge of digital currencies was considered “abnormal”. On the other hand, Singapore’s central bank has cautioned investors of cryptocurrencies to “act with extreme caution”.

Asian regulators are now monitoring closely the development of cryptocurrencies within their respective territory. Given its popularity, more and more people have become interested in digital currencies. Is this going to be the future of digital currencies? Are we seeing digital currencies to be ruled by different laws depending on the country?