South Korea is preparing to introduce a series of new rules on cryptocurrencies as it looks to prevent speculative investment amid fears that Bitcoin could be a bubble. It also wants to curb the practice of digital currencies being used in crimes.
Following an emergency meeting by ministry officials, the government is preparing a bill that will ban minors and foreigners from trading in cryptocurrencies or opening investment accounts for them within South Korea.
Furthermore, officials are proposing a ban on all cryptocurrency transactions unless they take place through exchanges that meet certain conditions: customers’ funds are to be kept separately, exchanges must explain investment risks, users’ real names have to be confirmed, anti-money laundering and asset protection systems need to be in place, and transaction details must be disclosed to the public.
Financial institutions such as banks will be prohibited from holding, purchasing, and investing in digital currencies. And the government is to form a tax force that will decide whether profits made on cryptocurrencies should be taxed.
The measures must be submitted to the National Assembly so they can be implemented.
There had been talk of a complete ban on cryptocurrencies in the country, but the government said it did not want to stifle innovation in fintech.
Seoul-based Bithumb, the world’s busiest virtual currency exchange, has said it would comply with the rules. Its trading volume reached 56 trillion won ($51 billion) last month, up from 305 billion won at the start of the year.
Reuters reports that Philip Lowe, Australia’s central bank governor, today warned that fascination with digital assets felt like a “speculative mania.”