South Korea is all set to roll out a new law that is said to negatively affect cryptocurrency exchanges in the country. This resulted in such platforms minimizing their services to the said nation.
Bad for cryptocurrency exchanges
This new regulation known as the Act on Reporting and Use of Specific Financial Transaction Information will go into full swing on September 25. According to reports, this new law aims to regulate foreign cryptocurrency exchanges that do business within South Korea without properly reporting to the Korea Financial Intelligence Unit.
In line with this, the said government agency has already sent out a notification to 27 of these crypto exchanges as they are given a heads up about the looming law.
Further, under this new law, South Korean banks will need to issue real-name accounts in line with the tougher guidelines for the prevention of money laundering. By the time this regulation goes into full swing, cryptocurrency exchanges will be barred from withdrawing money for crypto trading if they don’t have a real-name bank account.
Bitfront, Binance signing off
On August 15, the U.S.-based crypto exchange Bitfront announced that it will put a halt to providing a Korean language service on its platform come September 14. Also, on that same day, they will discontinue payments using Korean credit cards as they cited the above-mentioned stricter regulations. Before this, about a week ago, Binance – the world’s largest crypto exchange platform – made it known that they stopped trading pairs and payment options using the Korean currency.
Crypto pundits, on the other hand, have predicted that smaller cryptocurrency exchanges in South Korea are pretty much likely to shut down because they are believed to unlikely abide by these new set of rules.
South Korean lawmakers have been continuously warning investors about purchasing digital currencies. However, despite these efforts, investors may well seem to be unfazed as they deemed it as a lucrative asset.
It’s not just investors who are into this mad dash in buying cryptocurrencies and other digital assets. Young South Koreans have been investing in crypto as well as they anticipate huge returns as some of them stated that they cannot purchase a house if they solely rely on their salaries amid the surging prices of houses in the country. In line with this, South Korea is planning to impose a 20 percent tax on capital gains from cryptocurrency transactions.