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| Office for Government Policy Coordination Minister Hong Nam-ki announces new rules on cryptocurrency trading at a press conference in Seoul, Thursday. / Yonhap |
By Park Hyong-ki
The government has launched a regulatory offensive against speculative investment in cryptocurrencies by banning the use of false or "borrowed" names to open virtual accounts for trading them.
It will not allow banks and cyptocurrency trading operators to offer new virtual accounts. Traders can only use their real names to open cyptocurrency accounts certified and verified by banks that are under state regulatory jurisdiction.
Those who own virtual accounts and have been trading digital tokens will have to switch their trading activities to bank accounts using their real names for deposits and withdrawals by the end of January.
These are some of the steps announced Thursday to cool overheating cryptocurrency speculation. Anyone who wants to trade virtual tokens such as bitcoin from now on will have to follow these new regulations.
If traders and cryptocurrency trading operators fail to follow the rules, the government will shut them down indefinitely and take legal action if appropriate.
It will even consider shutting down cryptocurrency exchanges permanently.
Office for Government Policy Coordination Minister Hong Nam-ki said that the regulations will be strictly enforced and no excuses will be accepted from those failing to abide by them.
The government will mobilize financial regulators and state prosecutors to clamp down on speculative cryptocurrency investments which have been allegedly used for money laundering and other illicit trading.
"We held a meeting of vice-ministers from 10 state agencies and the Ministry of Justice proposed the shutdown of cryptocurrency exchanges. The government will consider this suggestion," Hong told reporters.
Additional regulations are in store, including taxing capital gains from cryptocurrency trading.
This can only be done with financial transactions such as trading stocks, derivatives and bonds using accounts under real names.
However, this does not mean that the government will recognize cryptocurrencies as real money or tangible assets traded as if they were stocks, bonds and currencies in the financial market.
Financial Supervisory Service (FSS) chief Choe Heung-sik compared trading cryptocurrencies to playing slot machines at casinos, saying that when gamblers win, they too have to pay taxes on their winnings.
He also said that just because the FSS is considering taxing cryptocurrencies, this doesn't mean it is going to recognize them as part of the financial system.
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