By Oh Young-jin
The governmnt will inspect six major local banks over virtual accounts offered to cryptocurrency exchanges.
The move is another in a series to prevent speculation and money laundering, while putting a damper on the hot new money market.
According to Yonhap news agency, the Financial Supervisory Service (FSS) will carry out inspections -- Woori Bank, Kookmin Bank, Shinhan Bank, NongHyup Bank, Industrial Bank of Korea and Korea Development Bank -- from Monday through Thursday.
The number of accounts in cryptocurrency exchanges came to 111 and their combined deposits are estimated at 2 trillion won ($1.8 billion).
Each account may have spawned millions of virtual accounts.
The authorities will check whether the six banks carried out their obligations to prevent money laundering in managing virtual accounts.
They are seeking to cut off fund inflows into cryptocurrency exchanges and shutter cryptocurrency exchanges that have loopholes in their system.
The government plans to issue another warning message this week against cryptocurrency speculation.
The government also said only real-name bank accounts and matching accounts at cryptocurrency exchanges can be used for deposits and withdrawals in a move to curb a frenzy of speculative investment into cryptocurrencies.
Despite a boom in cryptocurrency transactions, their exchanges go largely unregulated in South Korea, as they are not recognized as financial products. There are also no rules for protecting virtual currency investors.