South Korea is tightening the siege around cryptocurrencies. The South Korean government is now asking for cryptocurrency related companies to comply with regulations. The government position delayed the launch of two major Chinese cryptocurrency exchanges.
The South Korean government is cracking down on cryptocurrencies. It has proposed legislation seeking to limit how conventional banks interact with bitcoin and altcoins. The law would prohibit South Korean companies from providing settlement services for cryptocurrency transactions, a crucial part of credit and debit card transactions.
As a way to circumvent the Chinese government crackdown on cryptocurrency exchanges in September, two of the country’s largest bitcoin trading platforms have been trying to enter the South Korean market. OKCoin and Huobi, have been trying to find a way to legally set their operations on South Korean grounds but are now affected by the country’s rough position against cryptocurrency exchanges.
According to The Korea Herald, the regulators are currently working on a real-name identification system that will end the anonymous trading of cryptocurrencies in the country. The South Korean government is expected to end the practice of anonymous trading by January 20, 2018. Currently, this practice is possible through the use of “virtual accounts.”
In addition to prohibiting the issuance of new virtual accounts, the government has decided:
“A new entry into the virtual currency trading market will be blocked until the realization of the so-called ‘virtual money real name system’ that can confirm the identity of the account owner on the 20th of this month.”
The Korea Herald’s ‘The Investor,’ one of the most important financial news agencies in the country, reported:
“Two major Chinese cryptocurrency exchanges have delayed their launches in South Korea due to uncertainties surrounding the government’s regulation. Huobi and OKCoin have delayed their planned launches in Korea amid the tightening of government regulations.”
In October 2017, OKCoin established a new branch called OKCoin Korea planning to start a trading service in December. Initially, the platform would support ten cryptocurrencies, including bitcoin (BTC), bitcoin cash (BCH), and ether (ETH). The exchange also recently added new cryptoassets, including monero (XMR), raiden (RDN), and stellar (XLM).
Huobi has its own plans to launch an exchange in the country. The company recently partnered with Japan’s SBI Holdings to begin operations in Japan. According to Nikkei, SBI will buy a ten percent stake in Huobi’s South Korean subsidiary which will be directly competing with Bithumb, the largest crypto exchange in South Korea by volume.
A new South Korean exchange called Upbit has also been reporting trading volumes that exceed those of Bithumb. This new exchange is backed by Kakao Corporation, which owns the country’s largest chat app called Kakao Talk.
While all major crypto platforms in the country have already complied with all regulatory measures announced and revised their terms of service accordingly, the last minute regulatory changes came as a big bump in the road for the Chinese cryptocurrency exchanges.