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South Koreans Will Soon Have to Go to Through a Bank to Buy Bitcoin

The country is announcing some serious new policies this week.

by Jordan Pearson
Jan 23 2018, 4:59pm

Image: Shutterstock

The first bitcoins ever generated were inscribed with a headline from that day in 2009: “Chancellor on brink of second bailout for banks,” signalling the currency’s anti-bank origins in the year following the 2008 financial crisis.

Now, though, South Koreans will have to go through one of six banks in the country if they want to buy or sell Bitcoin or other cryptocurrencies on an exchange, Yonhap News Agency reported. The change will come into effect on January 30, according to the BBC. The use of existing trading accounts not tied to a bank will also be banned, and exchanges will be forced to share transaction data with the banks. This move will effectively ban anonymous cryptocurrency trading in the country.

The changes, announced on Tuesday by South Korea’s Financial Services Commission, aren’t the only new policies that the country will be implementing this year. On Monday, the South Korean government announced that it will also tax cryptocurrency exchanges’ profits by up to 24 percent this year. Bithumb, one of the larger exchanges in the country, is expected to pay 60 billion won in taxes (roughly $60 million USD), Yonhap News Agency reported.

After months of hemming and hawing (and the occasional conflicting announcement), this week’s news indicates that South Korea is taking its first big steps to regulate cryptocurrencies. Lawmakers around the world, including in the US, have expressed interest in reining in the current free-for-all in cryptocurrencies—where startups routinely raise millions of dollars overnight in exchange for digital assets—but South Korea is the first to act so forcefully.

It’s worth noting, of course, that on a technical level South Korea’s new regulations do not bar anybody from using Bitcoin anonymously. Short of taking away somebody’s computer and internet access—and even then, blockchain instructions can be sent via SMS—downloading open-source software and using a digital wallet to send peer-to-peer transactions will always be possible for the determined.

However, using an exchange to buy and sell Bitcoin is the preferred option for many due to convenience, and an account is necessary to trade in high volumes—and to do that, South Koreans will have to go to the bank after January 30.

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