Cryptocurrency Trading Worth Over 10 Million Won per Day Will Be Reported to FIU

Starting from January 30, cryptocurrency investors in South Korea will have to use real-name bank accounts in order to continue trading. They will not be allowed to trade digital currencies unless the names on their bank accounts matches the account name in cryptocurrency exchanges, even if they have existing virtual accounts. They will also be categorized into a subject to suspicious transactions and be reported to the Financial Intelligence Unit (FIU) when they deposit more than 10 million won (US$9,289) a day or 20 million won (US$18,579) in a week.

South Korea's financial watchdog announced “cryptocurrency related financial policies” on the 23rd. After the government-wide special measures for virtual currencies were announced on December 28 last year, the authorities had been conducting spot investigations into banks and exchanges.

Financial authorities said six banks, such as Shinhan, Nonghyup, Industrial Bank of Korea, Kookmin, KEB Hana and Kwangju Bank, will establish and implement the real-name verification system by the 30th. Once the rule comes into effect, digital currency traders will need to identify themselves with their real names at the exchange and have those matched with information at local banks by the 30th to make deposits into virtual coin wallets.

The authorities also created the new clause limiting maximum daily transactions. In regard to the standard of 10 million won (US$9,289) a day for suspicious transactions, they said, “We haven’t set the investment limit.” However, big investors are expected to reduce the volume of transactions in order to avoid a trace from taxation authorities. In addition, the authorities added that traders who frequently deposit and withdraw money – over five times a day and seven times a week – will be a subject to suspicious transactions to report.

Meanwhile, South Korea's financial watchdog also found out that some virtual currency exchanges were slack in their management of funds, including keeping customers’ money in the private accounts of their CEOs, after conducting site inspections into exchanges. In this case, it can create opportunities for criminal activity, like fraud and embezzlement, in the future, according to the authorities. Most exchanges and investors welcomed the government’s move to put the real-name system into force. Exchanges seems to have a positive outlook as their voluntary regulations are reflected in the new policies, rather than taking extreme measures of “shutdown.”