After the explosive growth in the number of cryptocurrency traders in South Korea, the government announced back in December that it would ban the creation of new anonymous accounts in an effort to curb the trading frenzy. On Tuesday, it announced that virtual currency traders can create new accounts under their real names starting January 30th.
Prior to these measures, currency exchanges issued encrypted virtual accounts to investors for trading. But the new measures will allow only real-name bank accounts with matching accounts at virtual currency exchanges for transactions.
What this means is that now, transactions are no longer anonymous.
This could help prevent illegal activities such as money laundering or tax evasion.
Also, with the banks requiring personal information, foreigners not residing in Korea and minors could be prevented from setting up accounts.
Experts say the new measures may not bring significant changes, at least in the short-term.
"I don't think there's going to be a noticeable difference, but it's going to be very difficult to see anyway. Because cryptocurrency right now is such a volatile investment, you'll continually see very large fluctuations in prices."
He adds however, that the real-name system is a good stepping stone for other changes that could eventually reduce market volatility.
"The real-name system is I think a first step to imposing taxes. I think it's probably useful to have taxes on cryptocurrency investments because right now at least in Korea, taxes are not being imposed on these cryptocurrency transactions, and because of that, I think it makes cryptocurrency investments more popular than it should be."
Were this to happen, it would mean virtual currency trading would become similar to trading of commodities such as stocks and bonds.
Lee Jeong-yeon, Arirang News