South Korea has been recently trying to bring order to the crypto-coin market. As part of the measures, the Korean Financial Services Commission announced that they are implementing a real name system for cryptocoin accounts in the country. As part of these new measures, all exchanges will need to share the details of each transaction with banks.
How the System Will Work
The banks will need to implement measures that will allow exchanges to share customer details with them. The system will come into effect before the end of January 2018, or at the start of February 2018.
When the system is in place, all those trading on exchanges will have to provide proof of identity. This is different from the current systemm where trade takes place anonymously. The accounts to be used for crypto coin trading will be issued by the banks. Once registered, a user will be able to buy or sell digital coins at exchanges.
For now, all financial institutions in the country have been banned from allowing the creation of new virtual accounts. The ban will only be lifted once the system has been implemented. Only those accounts with real names and matching accounts at the exchanges will be allowed to operate in the country. Any exchange that does not adhere to the measures will not be able to operate in the country.
Six Banks Will implement the System on January 30th
Initially, the FSC had indicated that the system would be in place by January 20th. However, due to some unforeseen issues, it was moved to January 30th. By this date, six banks will have a working system in place. The banks will include the Industrial Bank of Korea, Shinhan Bank, KB Kookmin Bank, and the Noghyup Bank.
Issues to Do With Taxation and Anti-Money Laundering
After some investigations at six major banks in South Korea, the nation’s Financial Intelligence Unit has been working on anti-money laundering guidelines. These guidelines are specifically targeted at cryptocoins.
This new system will be compliant with all AML guidelines. It is expected that it will help block funds used for money laundering as well as filter out minors. In the country, minors are barred from owning cryptocoins. Banks will all be required to adhere to the AML guidelines, and they will have to maintain records of all cryptocoin traders.
Besides this, through this system, the government will be able to “grasp the virtual currency transaction information to some extent through the bank”. As you may be aware, South Korea shares a tense military border with North Korea. Thus, there is always fear that their northern neighbor may use cryptocurrency exchanges to circumvent sanctions.
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