Currently, many cryptocurrency exchanges (including South Korean ones like Kucoin) allow trading with little more than your name and an email.
Bitcoin appeared to find a bottom on Friday, rebounding to $15 000 after moves by South Korea to curb speculation and protect retail customers took the cryptocurrency down more than 8% on Thursday.
“The government had warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility”, the country’s government said in a statement.
Those new regulations would include prohibiting anonymous trading accounts and could give authorities the ability to shut down exchanges, Reuters said. Among other concerns, unmasking bitcoin traders would open up owners to taxation, a significant concern now that bitcoin has increased in value exponentially. The virtual currency plunged more than 10% to below $14,000 on Thursday morning in Asia, according to CoinDesk.com, and continued to fluctuate through the day.
As part of what appears to be a series of updates created to improve oversight of industry practices, the government will also seek to bar banks from issuing new virtual accounts to cryptocurrency exchanges.
Mati Greenspan, a Tel Aviv-based analyst at investment firm eToro, said it would be too early to gauge the impact of the rules, but they sounded “ominous”. Demand is so high that prices for the unit are around 20 per cent higher than in the United States, its biggest market.
The country is also home to Bithumb, one of the world’s biggest bitcoin exchanges.
In comparison, about 11% of Americans polled by student loan comparison website LendEdu in September said they either now own or have owned virtual currencies in the past, while 17.2% said they would invest in bitcoin in the future.
South Korea may also stop local companies from providing settlement services for virtual currency transactions.
In a case highlighting the risks of cryptocurrency, a Seoul virtual currency exchange declared itself bankrupt last week after being hacked for the second time this year.
So far, China is the only country in the world to have totally banned bitcoin exchanges.
Seoul-based Youbit said it was filing for bankruptcy after hackers stole almost a fifth of its clients’ holdings.