By Kim Yoo-chul
The top financial regulator will partner with authorities in China and Japan to curb speculation using digital tokens, the Financial Services Commission (FSC) said Monday.
FSC Chairman Choi Jong-ku said the three nations have discussed how to regulate cryptocurrencies.
Choi did not elaborate but he expressed concern over the recent bitcoin craze among Koreans.
“After inspection of cryptocurrency accounts, we’ve decided to impose new regulations to deal with anonymous accounts and possible money laundering,” he said.
Choi noted that the country lacks concrete information on what exactly is going on in the “digital currency space” as there are no direct rules on virtual money trading.
The top financial regulator is set to carry out a joint in-depth inspection of six leading local banks that provide virtual currency accounts to investors.
The six are Nonghyup, the Industrial Bank of Korea, Shinhan, Kookmin and Woori banks, and the Korea Development Bank. Shinhan, Kookmin and Woori are among the country’s top four lenders alongside KEB Hana.
Over concerns surrounding anonymous cryptocurrency transactions, the FSC asked local banks to implement “know-your-customer” rules, a time-honored principle in the financial sector.
Meanwhile, investors having active accounts on cryptocurrency exchanges are required to link those accounts with a separate bank account.
It’s mandatory to offer identification information if they wish to either deposit or withdraw funds.
“We will pay extra attention on whether those banks apply protective measures for those involved in cryptocurrency trading,” Choi said.
If banks fail to comply with the guidelines, he noted they will be forced to shut down their digital token accounts.
Choi said the regulator will team up with the justice ministry and tax agency to set up a legal base, allowing the regulator to inspect cryptocurrency exchange operators directly.
“We aim to track where the money for cryptocurrency deals came from,” he said.
The regulator also pledged to take steps to toughen punishment against crimes involving cryptocurrency transactions. More than 2 million Koreans are known to own bitcoins.
It remains to be seen whether such measures and the strong stance will work. But analysts said the effect, if there is any, will be short-lived.