A South Korean blockchain association yesterday announced measures — supported by 14 exchanges in the nation including Bitthumb, the world’s busiest virtual currency exchange — to boost transparency in the trading of cryptocurrencies.
Users would only be allowed to trade virtual currency through one account after their identity has been confirmed via traditional financial institutions like banks, the Korea Blockchain Industry Association said in a statement.
Virtual currency exchanges with more than 2 billion won (US$1.84 million) worth in assets would be allowed to operate, the statement said, adding that the measures, which are not mandatory, are to be imposed beginning Jan. 1 next year.
“The regulations will ensure the safety of consumers and transparency in trade and are expected to be the strongest and most effective measures [regarding virtual currency exchanges] on a global scale,” the statement said.
Kim Jin-hwa, one of the association’s leaders, said exchanges would especially work toward identifying account users.
Drawn by bitcoin’s explosive surge of more than 15-fold this year, ordinary South Koreans from housewives to college students and office workers have rushed to mobile app-based virtual currency exchanges in hopes of quick profits, despite government-issued warnings.
Despite the announcement yesterday, analysts were skeptical the measures would affect bitcoin exchange prices to a great extent.
“Today’s announcement is unlikely to affect the [bitcoin] price as exchanges can always decide not to follow [the measures],” NH Investment & Securities Co cryptocurrency analyst Park Nok-sun said. “The measures are clearly positive in that they are actually trying to curb recent speculative investments.”
The world’s biggest and best known cryptocurrency, bitcoin stood at US$16,935 as of 1:43am GMT yesterday.
Cryptocurrency-related shares in South Korea extended gains after the announcement, with Vidente and Omnitel up 10.3 percent and 3.4 percent respectively near midday.
On the nation’s frenzy over cryptocurrency trading, South Korean Vice Finance Minister Ko Hyoung-kwon yesterday made it clear that the market needs to be regulated.
“The [cryptocurrency] market is like a wild horse that needs to be domesticated,” Ko said in an interview with Reuters.
Asked if the government would impose a tax on trading of virtual currencies or capital gains, Ko declined to give details, but said any plans to regulate the market would need elaborate planning to avoid unintended consequences.
The South Korean government on Wednesday said it is mulling taxes on the cryptocurrency market after bitcoin notched almost 20-fold surge in value this year.
“To tax them, there needs to be many preconditions, for example licensing the exchanges. But the market could also soar with such a permit,” he said, adding that such a regime could be seen as an implicit approval that virtual currencies were an accepted part of the financial system.
“It’s like a wild horse that likes to be whipped,” he said.
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