South Korea to impose new curbs on cryptocurrency trading

In South Korea, bitcoin has been extremely popular, drawing wide participation from housewives and students.
In South Korea, bitcoin has been extremely popular, drawing wide participation from housewives and students. PHOTO: REUTERS

SEOUL (REUTERS, BLOOMBERG, WASHINGTON POST) - South Korea's government said on Thursday (Dec 28) it will impose additional measures to regulate speculation in cryptocurrency trading within the country.

"The government had warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility," the government said in a statement.

It noted that trading prices of most virtual currencies were much higher on South Korean exchanges than they were on exchanges in other countries, although it did not provide specific examples.

The steps will include a ban on opening anonymous cryptocurrency accounts and new legislation to allow regulators to close virtual coin exchanges if needed, a measure recommended by the justice ministry, the statement said.

South Korea had previously announced its plan to tax capital gains from cryptocurrency trading to tackle what it sees as the risk of excessive speculation.

Bitcoin, the world's biggest and best-known cryptocurrency, has gained more than 19-fold this year.

In South Korea, bitcoin has been extremely popular, drawing wide participation from housewives and students.

South Korean investigators last week were looking into North Korea's possible involvement in the hack of a Seoul-based cryptocurrency exchange that collapsed earlier this month, according to a person familiar with the investigation.

Yapian, the owner of bitcoin exchange Youbit, said on Dec 19 that it would close and enter bankruptcy proceedings after a cyber attack that claimed 17 per cent of its total assets. It was also hit by an attack in April that local media have linked to North Korean hackers.

Police investigators and the Korea Internet and Security Agency are viewing the case as an extension of the April attack, according to the person, who asked not to be identified discussing confidential information.

While they aren't ruling out North Korea as a suspect, they are also open to all other possibilities, the person said.

The Wall Street Journal reported earlier that investigators saw telltale signs that North Korea was behind the Youbit attack. Spokesmen for both the police and Korea's Internet security body could not immediately be reached for comment.

North Korea has used an army of hackers to try and raise cash as the US has stepped up sanctions in a bid to thwart Kim Jong Un's push for the ability to strike the American homeland with a nuclear weapon.

Earlier this week, the US blamed North Korea for the WannaCry ransomware attack that affected hundreds of thousands of computers globally this year.

While North Korea allows Internet access to only a small portion of its population, it began to train its techno soldiers in the early 1990s, according to South Korea's Defense Security Command.

The country probably employs 1,700 state-sponsored hackers, backed by more than 5,000 support staff, according to the Australian Strategic Policy Institute.