Anonymity and money laundering are issues that have long plagued cryptocurrencies. These same issues are now being addressed by new cryptocurrency regulations set to take effect in South Korea. Market participants claim that the rules are set to bring an air of legitimacy to the fairly new cryptocurrency markets.
The Financial Services Commission of South Korea spoke of the implemented measures but did not release details of the rules’ effects. A January 23 published document provides information on the allowed actions stated in the regulations, namely: cryptocurrency tradings are only allowed from bank accounts bearing real names starting January 30. Such rules made it easy for banks to comply with KYC AML (Know Your Customer, Anti-money Laundering) obligations. According to the document, the said measures were made in order to “reduce room for cryptocurrency transactions to be exploited for illegal activities, such as crimes, money laundering, and tax evasion.”
Julian Hosp, co-founder, and president of TenX – a cryptocurrency start-up – explains the possible positive effects of the new rules, “I think it’s the start of a crackdown on anonymity and the illegal use cases that some cryptocurrencies might have.” He added the long-term benefits of the rules while also acknowledging its short-term disadvantages. “If, afterward, investors and companies have more legal security working in the ecosystem, it’s going to have some short-term downsides, but long term, it’s going to have a really, really big boost.”
John Sarson, Blockchain Momentum’s managing partner, believes that such restrictions are necessary. He explained, “Protocols to protect investors have been what the cryptocurrency markets have been missing and it’s what the legislation in South Korea seeks to implement.” Blockchain Momentum invests in blockchain-related companies and in cryptocurrencies. He added that these rules will provide cryptocurrencies the legitimacy it needs as well as greater scale, “It’s a good thing anytime an investment exchange knows their client and makes sure that their clients are doing things that are above board legally.”