The South Korean government has announced that six major banks will be ready to provide services to cryptocurrency exchanges this month. Under the new system, the government requires exchanges to share user data with banks.
Exchanges to Share Data with Banks
The Korean Financial Services Commission (FSC) announced some additional details of the new real-name system for cryptocurrency accounts on Sunday. “The government plans to require cryptocurrency exchanges to share users’ transaction data with banks,” an FSC official said, as quoted by the Investor. The official emphasized:
Banks are expected to introduce the system, which will require cryptocurrency exchanges to share users‘ transaction data with banks, late this month or early next month.
The new system will end the current practice of virtual account usage which allows anonymous trading of cryptocurrencies. These accounts are issued by banks for crypto exchanges’ customers to use to buy or sell cryptocurrencies at exchanges.
The regulators have banned financial institutions from issuing new virtual accounts until the new system is in place to ensure that “only real-name bank accounts and matching accounts at cryptocurrency exchanges” can be used for deposits and withdrawals, the news outlet described.
6 Banks to Introduce New System on January 30
The FSC’s announcement stated that 6 commercial banks including Nonghyup Bank, Industrial Bank of Korea, KB Kookmin Bank, and Shinhan Bank will have the new system in place from January 30, according to the Digital Times. Initially, the system was expected to be implemented around January 20. The publication quoted an FSC official detailing:
Six commercial banks that have supported virtual currency transactions will establish a deposit and withdrawal system to convert [to] the virtual money real-name system and provide full-fledged services from the 30th.
However, this new service “is targeted at existing virtual account users, and the opening of new accounts will [still] be suspended for the time being,” the publication noted.
Anti-Money Laundering and Taxation
Following the inspections of 6 major South Korean banks, the Financial Intelligence Unit (FIU) is preparing anti-money laundering (AML) guidelines related to cryptocurrencies.
The real-name system will be AML compliant. It is “expected to block illegal funds from money laundering as well as to filter out minors for whom virtual money investment is prohibited,” the news outlet conveyed. Banks have AML obligations which will require them to check and maintain transaction records of cryptocurrency traders.
Furthermore, the new system will allow the government to “grasp the virtual currency transaction information to some extent through the bank,” the news outlet noted, adding that:
As the government is able to access virtual currency transaction information, it will speed up taxation based on this information.
What do you think of this new system? Let us know in the comments section below.
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