South Korean banks are set to issue new real-name accounts for cryptocurrency transactions next week, when a ban on virtual accounts would be implemented.
Six South Korean banks will introduce a system of verifying crytpocurrency investors' identification next Tuesday, January 30, domestic news agency Yonhap reported, citing Kim Yong-beom, vice chairman of the Financial Services Commission.
The country also banned foreigners and minors from trading in cryptocurrency. Consequently, cryptocurrency exchange Korbit has stopped non-citizens from depositing Korean won on its platform.
The government had banned opening of virtual cryptocurrency accounts for weeks as they make it more difficult to identify real names of account holders.
Under the new system, cryptocurrency exchanges are required to share user transaction data with banks, Yonhap said.
The South Korean government has been voicing concerns for the past several months over the cryptocurrency craze, as the currency surge gained steam despite severe falls in between.
The country has witnessed intense interest in cryptocurrencies such as Bitcoin with its citizens, both young and old, investing heavily in these with the hope of making a quick profit.
On Monday, Yonhap reported that the government would collect up to 24.2 percent of tax on income of cryptocurrency exchanges. Bithumb, one of the leading cryptocurrency exchanges in the country, would have to pay around 60 billion won in corporate and income taxes, the agency reported.
South Korea hosts several cryptocurrency exchanges, but prices of cryptocurrencies in the country tend to be much higher than elsewhere, reportedly over 40 percent, as buyers exceed those willing to sell. Such premium is called "Kimchi premium" in the local media, in an allusion to the famous Korean dish of spicy pickled cabbage.
South Korea and China, two of the leading markets for cryptocurrencies, have led the group of countries that are planning to clampdown on the meteoric rise in the values of cryptocurrencies, alleging excessive speculation that could eventually end in the bursting of an asset bubble.
Governments are also concerned that these unregulated and decentralized currencies would facilitate money laundering and would be used to fund criminal activities such as drug-dealing and terrorism.
Earlier this month, South Korean justice minister's comments that the government was planning a legislation to ban cryptocurrency trading caused a massive sell-off in cryptocurrencies.
Later, the government sought to calm concerns saying that such a law would be decided only after several talks and consultations, suggesting it may not materialize in the near future.
However, the sell-off resumed last week after South Korean finance minister Kim Dong-yeon said in an interview to a local radio that banning digital currency exchanges was "a live option". Bitcoin price briefly fell below $10,000 before rebounding strongly.
Korean tax authorities raided leading digital currency exchanges, Bithumb and Coinone, this month on concerns over tax evasion.
The number of accounts linked to cryptocurrency exchanges in South Korea totaled 111 with a combined deposit value estimated around 2 trillion won or $1.8 billion, Yonhap reported. More than 2 million Koreans own digital currencies.
The country has sought deeper co-operation with regulators in China and Japan in curbing intense speculation in cryptocurrencies.
by RTT Staff Writer
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