Minors, non-Korean nationals, and banks and other mainstream financial institutions will be disallowed in cyptocurrency trade in South Korea under the government’s first set of official guidelines on virtual money that spiraled into a national frenzy.

To tackle mushrooming frauds and speculative activities, the Justice Ministry has been in charge of the clampdown instead of financial authorities to make the government stance clear that it wasn’t ready to accept cryptocurrency as a legitimate financial asset or instrument.

Under the measures, minors will be banned from digital currency trade and opening accounts. Non-Korean nationals including those residing in Korea will also be forbidden as the Chinese are suspected to be partly accountable for the speculation by moving to the Korean exchange to avoid clampdown at their home country.

Commercial banks and other mainstream financial institutions cannot buy, sell, or own cyptocurrency as collateral.

Law enforcement officers will crack down on fund-raising for bitcoin investment through fraudulent multi-level marketing, deceitful virtual currency sale, dealings of illegal items like drugs and concealment of crime proceeds using virtual currencies.

Authorities will also require banks to tighten identification procedures for account opening to keep minors and non-residents at bay from cryptocurrency exchanges, while seeking ways to force local cryptocurrency exchanges to establish anti-money laundering compliance programs and to report any suspicious transactions to banks. Established exchanges are subject to cybersecurity checks to protect customers’ data, effective next year.

The actions come upon warning that bitcoin fad has gone out of control in the nation with Korea now making up 20 percent of global digital currency trade.

By Lee Seung-yoon and Minu Kim

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]