Bitcoin price latest: Cryptocurrency plunges as traders in South Korea forced to identify themselves

The threat of new regulation is leading cryptocurrency's value to fall quickly

Andrew Griffin
Monday 22 January 2018 18:40
What is Bitcoin and why is its price so high?

Everyone trading bitcoin in South Korea will now have to identify themselves, in new regulation that endangers one of the cryptocurrencies' most central principles.

The regulation is wide-ranging and threatens one of the core parts of bitcoin. Cryptocurrencies have become popular largely because they allow for entirely anonymous transactions, meaning that people can use them to buy and sell illicit things like drugs or computer viruses without being traced.

But it is not as dramatic as it might have been. Initially, senior government ministers had suggested they might ban trading in bitcoin entirely.

Any regulation is significant in South Korea, however, where bitcoin trading is so popular that citizens have to pay an extra markup to buy them, since there is such interest. The country has helped propel the price of bitcoin to its current heights – and the recent suggestions of a ban helped drive it to one of its most dramatic crashes in recent months.

The new round of regulation has brought another crash, with the price of bitcoin dropping about 10 per cent over the last day.

Further rules might still be yet to come. At the G20 meeting in March, finance ministers are expected to impose new rules, some of which could apply across the world.

South Korea plans to require local banks to launch a real-name system for crypto currency trading that will make the up-to-now anonymous transactions be traceable as the country seeks to curb speculation and criminal activities.

Financial Services Commission Vice Chair Kim Yong-beom said at a press briefing Tuesday that the new measures, to take effect next week, will prevent foreigners residing outside South Korea who do not have local bank accounts and minors younger than 19 from buying or selling bitcoins and other digital currencies. Once the new system is in place, existing accounts used for crypto trading up to now can no longer be used, he said.

The moves follow warnings by South Korean authorities that they would ban anonymous trading in crypto currencies and crack down on speculative trading and possible crimes. Authorities are seeking to prevent use of crypto currency trading to engage in money laundering, tax evasion and other criminal activities.

The new requirements are meant to ensure that a crypto currency investor's money comes from a bank account owned by the same individual. Banks will be able to refuse to open accounts with crypto currency exchanges that do not disclose information about suspicious trading. They were told to closely monitor crypto trading that exceeds 10 million won ($9,338) a day or 20 million won ($18,676) per week and also accounts owned by corporations or groups and report any suspicious activity to the authorities.

"We expect that crypto currency exchanges that are in danger of being exploited for money laundering will be thrown out of the market," Kim told reporters.

He said the government does not intend to encourage or stimulate crypto trading.

South Korea is home to some of the world's largest crypto currency exchanges and a craze for bitcoin and other crypto currencies has swept the country.

The price of bitcoin fell was down 4 percent at $10,342.96 as of 0740 GMT Tuesday. It gyrated wildly earlier this month, soaring and then sinking on concerns over now South Korea and other governments might handle the boom in crypto currency trading.

Additional reporting by agencies

We’ve teamed up with cryptocurrency trading platform eToro. Click here to get the latest Bitcoin rates and start trading. Cryptocurrencies are a highly volatile unregulated investment product. No EU investor protection. 75% of retail investor accounts lose money when trading CFDs.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies


Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in