SEOUL, Jan. 23 (Korea Bizwire) — Six South Korean banks will begin issuing new trading accounts for cryptocurrencies next week by introducing a system that bans the use of anonymous accounts in cryptocurrency transactions, a senior financial regulator said Tuesday.
When the banks introduce the system of verifying cryptocurrency investors’ identification next Tuesday, current virtual accounts for virtual coins will be banned the same day, Kim Yong-beom, vice chairman of the Financial Services Commission (FSC), told reporters.
Financial authorities will focus on inspections into whether banks take appropriate measures to stop transactions if cryptocurrency exchanges refuse to provide customers’ information, officials said.
“Nobody, including the government, guarantees the value of cryptocurrencies,” Kim said. “Given its highly volatile nature, please be cautious when making investment decisions.”
Foreigners and underage investors will also be banned from opening cryptocurrency accounts in South Korea, officials said.
Opening cryptocurrency accounts has been banned for weeks until the banks install the system that ensures only real-name bank accounts and matching accounts at cryptocurrency exchanges are used for deposits and withdrawals.
The real-name trading system is part of the government’s measures to curb speculative investment into virtual coins, amid growing fears that a bubble over cryptocurrencies may be set to burst.
The new system will also require cryptocurrency exchanges to share users’ transaction data with banks.
The six banks include Shinhan Bank, NH Bank and the Industrial Bank of Korea.
Cryptocurrency investors and exchanges reacted positively after the government’s announcement.
Bithumb, one of the nation’s three largest cryptocurrency exchanges, said that it will actively cooperate with the government’s policy.
“We will make efforts to build a more transparent and healthy transaction system with the real-name trading platform,” Bithumb said.
A 44-year-old office worker, who gave only a surname Moon, said prices of cryptocurrencies are likely to rise with new money expected to kick in after the government allows banks to open new accounts next week.
The local price of bitcoin fell 4.4 percent to 13.3 million won (US$12,413) at one point on Tuesday afternoon, according to a cryptocurrency exchange Upbit.
Cryptocurrencies, such as bitcoin and ethereum, have rapidly gained popularity in recent years among South Korean investors hoping to make quick money. South Korea is home to one of the world’s biggest private bitcoin exchanges, with millions of people estimated to own some of the best-known digital currency.
Despite a boom in cryptocurrency transactions, the exchanges go largely unregulated in South Korea as they are not recognized as financial products, with the country having no rules for protecting virtual currency investors.