| submitted by /u/Mevan_suto
A national petition against extreme cryptocurrency regulations in South Korea has exceeded 200,000 signatures, the requirement for the government to respond. The petition entitled “Has the government ever dreamed a happy dream for the people?” was filed on December 28. Meanwhile, another related petition calls for the removal of the governor of the country’s Financial Supervisory Service.
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South Korean banks have backtracked from their decisions to stop servicing cryptocurrency accounts as crypto investors protested and the government re-discussed its policy. The country’s 6 major banks have been told that they must follow through with the original plan and install the system that would end the anonymous trading of cryptocurrencies.
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The South Korean authorities will start inspecting major banks for their compliance with cryptocurrency regulations on Monday. This move follows the regulators’ recent announcement prohibiting the use of virtual bank accounts for anonymous trading.
Also read: Russian Regulators Draft Law to Restrict Crypto Mining,…
I am doing this again, because I hate seeing people get fooled over and over by these horrible news articles that are obviously preying on misconceptions by people in other cultures.
So I am here to break down exactly what the recent Rueters article is trying to do to people who don’t understand how the Korean banking system works.
Now, before I moved to Korea, I too was naïve about their banking practices. If I saw an article saying “The steps will include a ban on opening anonymous cryptocurrency accounts and new legislation to allow regulators to close virtual coin exchanges if needed” I too would be confused by misunderstanding.
But, what exactly does this mean? Opening cryptocurrency bank accounts? How does that happen in Korea? In America, I only have 1 bank account. Maybe two. And how do I open one anonymously?
What Reuters is doing, and it knows it, is failing to explain Korean banking systems in general.
So, in Korea, it is very common for businesses to open temporary bank accounts for customers. These are called “virtual bank accounts.” They are not real or tied to any specific name. “Virtual” (this is important to understand) Often, these bank accounts are open for only 24 hours, and they are anonymous. People can go to the ATM, transfer the exact amount to that account, and pay for items online. Even Gmarket allows users to do this. It is another, easy way to pay for things securely, online.
Now, Bithumb allows this as an option (one of several) in order to deposit Won into their website. These bank accounts are generated on the spot, and are only open for 3 hours. In that span, you can go to an ATM, send your Won to your anonymously generated bank account, and it will show up on Bithumb. You can also issue a “virtual” account that is linked to your actual bank account, and takes additional verification processes.
I am not sure how Korbit/Bithumb do this, but I do have a “virtual account” with them, but it is linked directly to my name, which matches exactly with my already submitted government id. I would assume that Korbit/Bithumb are already taking these measures, and have been. It could also be that the government wants to get rid of virtual accounts entirely, but I would imagine, as long as it is not anonymous, they will keep on issuing accounts. And even if these “virtual” accounts, which are not anonymous, are banned, Bithumb and Korbit will start using a system similar to Coinbase.
Here are some images to show you how these accounts are handled at Bithumb: https://imgur.com/a/BkAKP
I will say this: I had a more difficult time signing up with Bithumb than I did on Coinbase, and this was before any regulation was even mentioned in Korea. Speaking for Bithumb, I can assure you, they plan to follow every regulation, and may already have the necessary information to comply.
I can not make a virtual account anonymously. It must match my gov. id name, which Bithumb has a record of.
I can not deposit money unless it comes from a bank account registered in my name. I even had to submit a copy of the ATM receipt which matched the date and time of my deposit.
Bithumb has copies of my government identification and my passport. When I withdraw into a bank account, that account must match the same name on these documents, or my deposit will not work.
Based on this new FUD, Bithumb, and most likely UpBit and Korbit are already following these regulations completely.
Now, let’s drop the FUD ridden, 2 paragraph Reuters article, and look at some MUCH more informed pieces about this news, from Korean sources.
1.) http://english.yonhapnews.co.kr/national/2017/12/28/0301000000AEN20171228005600315.html Notice how this short article spells out clearly the regulations and ends by stating exactly won’t be affected by it. “only real-name bank accounts and matching accounts at virtual currency exchanges can be used for deposits and withdrawals, while the issuance of new virtual accounts to cryptocurrency exchanges will be banned.” So, “virtual” accounts, which are what I described above, is clearly what is being regulated. And they must match the “real name” of the users.
And we have people here claiming that no one in Korea can make a new account on any exchanges. And then they go on to say Korea is starting to shut exchanges down too.
The Korean government is saying that, IF exchanges don’t comply, they will begin enforcing it and shutting them down. They will start looking to make sure that places like Bithumb are no longer issuing virtual accounts, and requiring real-name bank accounts on their platform. Bithumb will comply. Korbit will comply. UpBit will comply. They will compete to comply quicker. These regulations are no different than what Coinbase went through.
2.) http://news.naver.com/main/read.nhn?mode=LSD&mid=shm&sid1=101&oid=008&aid=0003985407 Another Korean source which is also very clear on what the government said. It clearly states that exchanges won’t be issued “virtual” bank accounts anymore, and it will need to move to an “actual name” system. New customers must register with their actual bank accounts. It then goes a step further and explains why, stating that it would be more difficult to trace any money laundering if a temporary account was used to buy crypto.
I am not here to argue whether this is good or bad. But we have people on this sub-reddit who simply don’t understand what “banning new virtual accounts” means. And Reuters did not do it’s diligence, like the other articles I posted here, in explaining what “virtual account” means. And they know it.
Stop being fooled!
Survey data shows that about three out of every 10 South Korean workers have invested in cryptocurrency in some shape or form.
Also Read: Former FDIC Chair Sheila Bair on Bitcoin: “Value — Like Beauty — Is in the Eye of Beholder”
31.3% Invested in Virtual Currencies