July 27, 2024

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[THE INVESTOR] Cryptocurrency transactions in Korea will be subject to strict surveillance starting this month as the government is poised to enforce real-name transactions as part of its measures to cool the market.

Bithumb, the largest cryptocurrency exchange, is banning minors from using its service starting from Jan. 1, while Coinone has given them time till Jan. 5 to withdraw their funds. New virtual accounts are also not allowed to be issued, and major exchanges are canceling those issued to foreigners and nonresidents.

These measures will prevent new investors from buying cryptocurrencies such as Bitcoin and Ethereum until the new real-name account system is introduced around Jan. 20, according to industry sources. From then on, only those with bank accounts registered under the same name of their cryptocurrency accounts can make deposits and withdrawals.

The measures are likely to encourage cryptocurrency investors to shift to the real-name account system and curb the latest frenzy of speculative investments, according to sources at the Financial Supervisory Commission. 

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Last week, the Korean government announced a set of fresh measures to curb trading of cryptocurrencies, including a possible closure of exchanges if necessary, amid growing fears that the latest price hikes are a bubble waiting to burst.

Critics, however, say the government is getting too involved, and its regulatory measures are anti-market. Jeong Hee-chan, a Korean lawyer, said on Jan. 2 that he has filed a petition with the Constitutional Court for a review of the government’s measures.

“The government has concluded that investing in cryptocurrencies is speculation without much contemplation and the clampdown is an unlawful exercise of power that violates economic freedom," Jeong said. 

Some investors had announced a protest in Gwanghwamun, central Seoul, to protest what they call “anti-cryptocurrency” measures last weekend, but it eventually fizzled out.

In the meantime, Bitcoin prices in Korea extended a fall on the day following a plunge last week after the government’s toughened regulations, which include real-name transactions. Bitcoin was trading at 18.71 million won ($17,587) at Bithumb as of 3:30 p.m., about 10 percent down from 21.63 million won on Dec. 28.

But other popular cryptocurrencies like Etherium and Ripple gained by 14 percent and 1 percent, respectively.

By Park Ga-young (gypark@heraldcorp.com)