South Korea imposes tighter regulation on virtual currency instead of ban
The country has become an important centre for virtual currency trading, with increasing participation by small retail investors. There is also concern about illegal trading, said Finance Minister Kim Dong-yeon. A recent investigation by the customs service detected KRW637 billion (USD600 million) of illegal foreign exchange trading, of which KRW472 billion was believed to be in cryptocurrencies. Only licensed banks and brokers are allowed to offer foreign exchange services in South Korea, and residents are severely restricted in the amounts of cash they can move out.
The new regulations, which took effect on 30 January 2018, require traders to use cryptocurrency accounts in their real names, enabling banks to identify and screen the exchanges' users. To deposit additional funds in accounts at an exchange, or create new accounts, a user must have a bank account in their own name, at the same bank as the exchange. Users who do not comply will be able to withdraw funds only from the exchange.
Banks must file suspicious transaction reports on all transactions conducted by corporations; where a customer withdraws funds in cash that he did not deposit; where deposits are pooled by several parties; where funds are transferred to foreign entities; or where transactions are unusually, large, frequent, or apparently split into instalments.
The ban on foreigners and minors from accessing the exchanges, introduced in December 2017, will remain in place.
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