Korbit, the third largest bitcoin and cryptocurrency exchange in the South Korean market behind Bithumb and Coinone, has announced that non-Korean nationals or foreigners will not be allowed to deposit Korean won at any domestic cryptocurrency exchanges.
In a message sent to its clients, Korbit stated:
“Please note, however, that non-Korean nationals, both resident and non-resident, will not be allowed to deposit KRW at any domestic cryptocurrency exchanges when the new KRW deposit method is implemented. We will explain further via a separate message.”
The Korbit team noted that the closure of Kookmin Bank virtual bank accounts on the trading platform along with the cryptocurrency trading ban for foreigners is a part of a new anti-money laundering (AML) policy introduced by the South Korean government.
“In order to comply with the identification and anti-money laundering regulations being enforced by the government, the current KRW deposit method will be terminated by the end of January 2018,” said Korbit.
Last month, on December 14, CCN.com reported that the South Korean government released four major regulations to better regulate and foster the local cryptocurrency exchange market. One of the four regulations was to prohibit underaged investors and foreigners from trading cryptocurrency-to-fiat (KRW) on local trading platforms.
The government document leaked in early December read, “request banks and exchanges to ensure underaged investors and foreigners cannot open trading accounts on cryptocurrency exchanges.”
In December, the South Korean government explained that it has decided to prohibit foreigners from trading cryptocurrencies within the local market to prevent overseas investors from taking advantage of the arbitrage opportunity in the local cryptocurrency market.
Since trading prices of most cryptocurrencies in the South Korean market are at least 15 percent higher than global average prices, the government requested both cryptocurrency exchanges and banks to disable foreigners from trading cryptocurrencies in the local market.
Initially, local exchanges planned to prohibit foreigners from trading cryptocurrencies by January 20. But, based on the statement of Korbit, foreigners will be able to trade until January 31 and by the end of this month, overseas investors will no longer be able to deposit Korean won on South Korean cryptocurrency trading platforms.
Last week, the South Korean government and the executive office of President Moon Jae-in officially stated that a cryptocurrency trading ban will not be imposed in the short-term. Rather than a ban, the government emphasized that strict regulations will be imposed to ensure the local cryptocurrency exchange market remains stable and regulated for general consumers.
Following the statement of the government, South Korea’s Fair Trade Commission chairman Kim Sang-jo said that closing down cryptocurrency exchanges is realistically impossible, considering the immense economic impact it would bring.
The statement of chairman Kim translated at CCN.com read:
“[Shutting down cryptocurrency exchanges] is not realistically possible. Based on electronic commerce law, the government does not have the authority to close down cryptocurrency trading platforms.
From the viewpoint of an economist, it is not a fair and transparent decision to outright ban economic activity. Whether it is excessive speculation or not, the gain or the loss is the responsibility of the investor.”
As of current, it remains unclear whether foreigners will be prohibited from trading cryptocurrencies in the local market in the long run.
Featured image from Shutterstock.
Last modified: May 20, 2020 9:10 PM UTC