South Korea Issues More Regulations on Cryptocurrency (1/15/2018)

The government of the Republic of Korea has instructed the nation’s banks to begin recording the employment status and net worth of cryptocurrency investors, in a move that will essentially shut out students, housewives and the unemployed from the cryptomarket.

Banks have been advised to periodically check the transactions of virtual-currency customers, as well as customers of cryptocurrency exchanges. Citizens who do not have income, such as students, full-time housewives and unemployed will have their accounts closed if they do not report such accounts. This will make it difficult for non-income earners to enter the virtual-money market.

Financial authorities plan to apply Enhanced Due Diligence (EDD) to a virtual account of a virtual currency exchange when a bank realizes a virtual account real name system. The obligation to identify risky customers should further identify the name of the customer (name and resident registration number), address and contact information, the place of residence, the purpose of the financial transaction, the source of funds, the workplace and the property.

Investors will also be subject to EDD when they trade accounts in a virtual currency exchange and other banks. Conversely, if you have a bank account like a virtual currency exchange, you will not be subject to EDD. The problem is that banks are not likely to apply Customer Due Diligence (CDD) to their virtual accounts. It is anticipated that existing accounts will be closed due to the fact that exchanges and investors have trouble with account details and have not figured out the flow of funds transactions.

Therefore, existing investors should open their own information according to the real name system when opening a virtual money account. If you are an uninvited person, the bank may not classify you as a risky customer and open an account. Because the virtual money accounts are virtual accounts, the EDD should be used to disclose the status of assets.

Banks are also burdened with such virtual money virtual accounts. If it is proven that the EDD has been violated by mismanagement, it will be subject to high-intensity sanctions by the financial authorities. The virtual currency virtual account must periodically check the EDD. Banking staff and costs are expected to be substantial.

It is difficult for investors to transfer money and money when they transfer to a foreign exchange market because it is difficult for them to invest virtual money into a domestic bank account. Remittance is also blocked by the Foreign Exchange Transactions Act. A financial official said, “Foreign currency remittances for virtual currency investments are being blocked by overseas authorities.” Domestic companies are also preventing such foreign currency transfers. ”

It is also expected that foreign banks will not be able to make a cash payment. An official of the financial authority said, “In the case of money transfer through a foreign bank, it is not practical because it is subject to the Foreign Exchange Transactions Act and the remittance limit is limited.” Recently, the regulations of the Korean financial authorities have been strengthened, If you think that regulations of overseas financial authorities will not be more strict than domestic regulations, it is a big mistake. ”

* As this is breaking news, this post is still awaiting editorial revision.