South Korea’s government released emergency measures for cryptocurrency regulation on Thursday. Bitcoin exchanges will now be regulated. Among other measures, there will be a ban on banks, minors, and foreigners trading cryptocurrency as well as a clampdown on virtual bank accounts needed to trade cryptocurrencies in Korea.
Regulating Crypto Exchanges
South Korea’s government held an emergency meeting to discuss cryptocurrency regulation on Thursday. Following the meeting, the regulators released “virtual currency emergency measures,” Hankyung reported. The publication explained, according to the announcement:
A virtual currency exchange, which has more than 10 billion won in sales such as Bithumb, Coinone and Korbit, or more than 1 million visitors per day, is expected to receive the government’s ‘Information Security Management System (ISMS)’ certification next year.
The regulators have also increased the standard and penalties applicable when a security breach occurs at exchanges. “We will not allow virtual currency transactions unless the requirements for protection of investors, transparency of transactions and other measures are met through prompt legislation in the near future,” the government was quoted by the publication.
This week, news.Bitcoin.com reported on the regulators proposing six conditions for crypto exchanges to operate.
A Ban on Banks, Minors, and Foreigners
The measures contain some prohibitions. News.Bitcoin.com reported on Wednesday of the government’s plan to impose a ban on banks from engaging in any cryptocurrency activities. Hankyung confirmed:
The government also decided to ban financial companies from buying, securing, and investing in virtual currency.
The measures also impose a ban on foreigners and minors. “Foreigners who are not residing in Korea or minors including high school students will not be able to open an account for virtual currency transactions in Korea,” the news outlet detailed. Moreover, those who already own cryptocurrencies will not be able to make additional trades.
As for a blanket ban suggested by the Ministry of Justice, the news outlet noted that “the ban, which has been reviewed by the Ministry of Justice, has not been adopted at the meeting. It was reported that the government was worried that if all transactions were banned, there would be controversy over infringement of private property.”
Clampdown on Virtual Bank Accounts
The government’s measures include a “clampdown that called for banks to stop issuing virtual accounts for digital currency exchanges,” wrote the Investor. These accounts are issued by banks for cryptocurrency exchange customers. News.Bitcoin.com explained on Wednesday how a virtual account is needed for cryptocurrency trading in Korea.
According to Hankyung, the government asked banks to confirm whether the owner of the cryptocurrency account is a minor or a foreigner. However, a bank official told the publication that “banks only issue virtual accounts to the exchanges and do not know who the virtual accounts are issued to.”
Nonetheless, most major banks in South Korea have announced that they will stop providing virtual bank account services to cryptocurrency exchanges.
Crime, Monitoring Trends, and Taxation
The government also decided to strengthen the crackdown and punishment of cryptocurrency related crimes, including the investment and recruitment of multi-level sales, fictitious coin sales, and illicit transactions. In addition, the news outlet conveyed:
The police are planning to conduct a special crackdown on ‘hacking and personal information infringement cases’ related to virtual currency, as well as investigating the actual conditions of virtual currency transaction refunds.
The Financial Services Commission (FCC), the Financial Supervisory Service (FSS), and the Korea Exchange will be monitoring cryptocurrency trading trends as well as “abnormal trading of virtual currency related stocks,” the publication noted.
As for taxation, the government announced that it will examine the issue by forming a task force with private experts and related organizations such as the Ministry of Strategy and Finance and the National Tax Service. News.Bitcoin.com recently reported on the government planning to tax bitcoin use as well as get user data from exchanges.
How effective do you think South Korea’s emergency crypto measures will be? Let us know in the comments section below.
Images courtesy of Shutterstock and Hankyung.
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Author: Kevin Helms