SEOUL, Jan. 15 (Korea Bizwire) – The Financial Supervisory Service (FSC) has crafted a rewards-and-penalties system to persuade cryptocurrency investors to provide identification information prior to conducting transactions.
An individual at one of South Korea’s financial regulatory agencies said, “Since banning cryptocurrency transactions outright will take a considerable amount of time, [the FSC] will look to the periphery of existing law and employ methods to reduce the maximum amount of activity in the cryptocurrency market.”
“The ID system will be introduced as soon as possible, and a set of anti-money laundering guidelines formulated based on the results of inspections at six commercial banks is planned,” the insider added.
The ID system will be rolled out at the end of the month; investors who acquiesce to the government’s demands and give up their anonymity will be able to conduct their business on their virtual accounts with limited interference.
However, the “limited interference” entails a complete restriction on all deposits, an attempt to block the flow of new funds into the cryptocurrency bull market.Investors who refuse to comply with the ID system will face punishment, with one hypothetical outcome currently discussed being a fine for these contrarians. However, as this would require new legislation, industry watchers are of the opinion that investors need not fear for their checkbooks just yet.
“Similar to 1993 when people who did not switch over to using the ID system were fined once the real-name financial system law was passed, those who refuse this time will face a varying range of consequences,” noted one industry analyst.
With the user information, the government aims to root out foreign investors based abroad and minors. In addition, it will begin gathering data for an eventual taxation system, and will implement a transaction limit per person.
In the past few months, the surge in public interest in cryptocurrency, buoyed by rags to riches tales and skyrocketing values, has deeply concerned government authorities, who believe the digital currency may prove to be nothing more than a bubble that will leave behind a morally bankrupt society in its wake.