South Korea to Ban Anonymous Accounts, Tighten Hold on Exchanges

Jon Howard
December 30, 2017

The announcement likely contributed to the price of the best known cryptocurrency, bitcoin (BTC) to drop more than 11% or $1,000 this morning.

"I think regulators have done what they're supposed to do", Cedric Jeanson, a former JPMorgan trader and founder of the bitcoin-focused hedge fund BitSpread, said of Korea's latest measures in an interview on December 28.

The South Korean government said it is banning the use of anonymous virtual accounts in cryptocurrency transactions as part of efforts to curb speculation in virtual currencies.

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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.

The crypto currency recovered but is still down more than 7% on the day.

In a followup statement, the government added, "Officials share the view that virtual currency trading is overheating irrationally ... and we can no longer overlook this abnormal speculative situation". This highlights a huge local obsession relating to cryptocurrencies within the South Korean population. While bitcoin's debut on regulated derivatives exchanges in Chicago was thought to have given it a new mainstream channel for investors to tap, so far trading volume has been limited. In the short term, I think we continue to go back and forth. Part of the trading in South Korea is carried out anonymously and this might be banned if we are to believe new reports in global media. If the plan of a shutdown turns out to be true, this will surely come as a major setback to the global crypto markets as one more dominant player after China could be seen withdrawing its operations. Many of them believe that there is a huge bubble in the market and this can burst at any point in time.

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