SEOUL • A real-name trading system for cryptocurrencies became operational in South Korea yesterday, with the use of anonymous bank accounts in transactions banned to prevent virtual coins from being used for money laundering and other illegal activities, Yonhap news agency reported.

The trading system is also part of the government's latest measures to curb speculative investment in virtual coins amid growing fears that a cryptocurrency bubble may be set to burst.

Three million people in South Korea are estimated to have invested in cryptocurrencies, and the nation's six banks have started verifying investors' identities, said Yonhap.

A ban on the opening of cryptocurrency accounts has been in place for weeks while banks work on installing the system, which ensures only real-name bank accounts and matching accounts at cryptocurrency exchanges for deposits and withdrawals.

In South Korea, foreigners and underage investors may not open cryptocurrency accounts.

The new system also requires cryptocurrency exchanges to share users' transaction data with banks, a move that could potentially allow the government to impose taxes down the line.

Some cryptocurrency traders and exchanges predict the prices of virtual coins would rebound when banks allow opening of new cryptocurrency accounts, according to Yonhap. Others say prices will adjust further amid reports that only four major exchanges - Bithumb, Upbit, Coinone and Korbit - are likely to attract new investors as banks are expected to reject transactions with small and mid-sized exchanges.

Cryptocurrencies such as bitcoin and ethereum have rapidly gained popularity among South Korean investors hoping to make quick money.

ASIA NEWS NETWORK