South Korea launched a real-name trading system for cryptocurrencies on Tuesday, banning the use of anonymous bank accounts in transactions to prevent cryptocurrency from being used for money laundering and other illegal activities.
Opening cryptocurrency accounts has been banned for weeks while the banks have installed the system, which ensures only real-name bank accounts and matching accounts at cryptocurrency exchanges for deposits and withdrawals. Now each trader must identify himself with the help of a bank account to buy or sell a cryptocurrency.
The new system also requires cryptocurrency exchanges to share users' transaction data with banks, a move that could potentially allow the government to impose taxes down the line. In addition, foreigners and underage investors are banned from opening cryptocurrency accounts in South Korea.
About 3 million people in South Korea are estimated to have invested in cryptocurrencies, and the nation's six banks have started verifying cryptocurrency investors' identities.