South Korea has introduced a real-name verification system for cryptocurrency traders, marking a significant shift from anonymous transactions to enhanced regulatory oversight. The system, effective from January 20, aims to curb speculative trading and improve financial transparency.
Government-Backed Real-Name System
According to Yonhap News, the South Korean government announced the implementation of this system as a special measure to eliminate cryptocurrency speculation.
Previously, traders could use anonymous virtual accounts issued by banks to cryptocurrency exchanges. However, regulators flagged these accounts for enabling speculative practices and reducing transaction transparency. The government has now banned new virtual account issuance, with major exchanges complying with the updated regulations.
Additional Cryptocurrency Regulations
Anti-Money Laundering (AML) Measures:
- Banks must enforce stricter AML protocols for crypto exchanges.
- Suspicious transactions must be reported to authorities.
- Financial services will be denied to exchanges violating government policies.
Crackdown on Crypto-Related Crimes:
- Authorities plan to investigate market manipulation and prosecute offenders.
- The National Police Agency will intensify efforts against illegal crypto activities.
Multi-Agency Oversight:
- The Korean Customs Service, Prosecutors’ Office, and Police will handle violations of the Foreign Exchange Transactions Act.
- The Ministry of Science and ICT and Korea Communications Commission will routinely audit exchanges.
FAQs
Q: Why did South Korea ban anonymous crypto trading?
A: To reduce speculation, enhance transparency, and align with global financial regulations.
Q: How will the new system affect traders?
A: Traders must link their bank accounts to exchanges for identity verification, ensuring traceability.
Q: What penalties apply for non-compliance?
A: Exchanges violating rules face service suspensions or legal action; individuals may be fined or prosecuted.
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This reform reflects South Korea’s commitment to a secure and regulated cryptocurrency ecosystem, balancing innovation with investor protection.