Cryptocurrency Controls

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The government has announced its plans to regulate the cryptocurrency market in Korea. Starting Tuesday next week transactions will only be allowed by those who use real-name bank accounts at approved banks, while transactions of more than 10 million won per day will be reported.​

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The findings of on-site inspections of six banks associated with cryptocurrency transactions were more shocking than expected. One cryptocurrency exchange received more than 50 billion won from customers and moved the funds to its internal director's personal bank account before depositing the money to another exchange's bank account.

[Soundbite] Choi Seong-il(Financial Supervisory Service) : "Fraud, embezzlement, and unapproved funding may take place and the money could be directed to other exchanges to cause price manipulation and other unfair trading practices."

Inspectors also found suspected cases of illegal drug money coming into Korea, pyramid schemes, or unapproved funding through virtual currency exchanges. However, the banks failed to oversee them properly. The banks weren't aware that the accounts related to cryptocurrencies were registered as shopping malls or communication businesses, indicating that their risk management was shoddy. This is why the government hurried to announce its financial countermeasures. Starting from January 30th, all cryptocurrencies can be traded only through the bank accounts held under real names. User accounts must be in the same bank as the cryptocurrency exchange's account, and deposits and withdrawals are possible only after an account holder's identity has been confirmed and the account is registered with the bank. Exchanges that do not cooperate with these guidelines will not be able to conduct financial transactions.

[Soundbite] Kim Yong-beom(Financial Services Commission) : "Banks can halt account services, so cryptocurrency exchanges highly vulnerable to money laundering can be ousted."

The government imposed more responsibility on the banks by mandating them to report suspicious trading, such as short-term trades amounting to more than 10 million won a day or 20 million won over seven days.