SEOUL – The South Korean government issued measures to ban the use of anonymous virtual accounts in cryptocurrency transactions on Thursday following a ministerial meeting.
The measures, currently in effect, stipulate deposits and withdrawals be allowed only in digital accounts that can be verifiable with the bank account with a person’s name, and also ban the issuing of new virtual accounts not linked to a bank account.
Hong Nam-ki, minister of the Office for Government Policy Coordination, said the government “can’t let this abnormal situation of speculation go on any longer,” according to local news agency Yonhap.
The decision goes against one of the main characteristics of cryptocurrencies: the blockchain, a technology that allows the encryption and recording of transactions between two parties in a verifiable, permanent and anonymous manner without intermediaries.
South Korea is taking the steps taken by Japan and other countries, where cryptocurrency exchanges require users to furnish official documents for registration as per government regulations.
South Korea’s Financial Intelligence Unit and Financial Supervisory Service will make joint inspections of virtual cryptocurrency exchanges to ensure that transactions are carried out under a real name.
In South Korea and Japan, cryptocurrencies have become a popular form of payment, an investment asset and are even used as a pension fund due to relatively small returns from other investments.
Hong said that speculation in cryptocurrencies was rife in South Korea, where values of many virtual currencies have become higher than abroad and as the Central Bank does not offer guarantee on the currencies, they are susceptible to fluctuations and big crashes.
The South Korean ministry of justice had proposed suspending cryptocurrency exchanges, but the final measures are aimed at stopping the anonymous use, preventing money laundering and reducing advertisements about cryptocurrencies.