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(LEAD) Banning cryptocurrency exchanges needs more consultations: finance minister

2018/01/12 15:38

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(ATTN: ADDS details in paras 7-11)

SEJONG, Jan. 12 (Yonhap) -- Finance Minister Kim Dong-yeon said Friday that relevant ministries need to hold more consultations over the justice ministry's plan to ban cryptocurrency exchanges, but the government will continue to take actions against speculative investment in virtual coins.

The remarks by Kim came a day after Justice Minister Park Sang-ki told reporters that the ministry is preparing for a bill to ban cryptocurrency exchanges at home.

"The issue of shutting down (cryptocurrency) exchanges, told by the justice minister yesterday, is a proposal by the justice ministry and it needs consultations among ministries," Kim said.

Although it would take months or even years for a bill to become a law, the justice ministry's announcement sent local prices of cryptocurrencies and cryptocurrency-related stocks into a tailspin.

Tens of thousands of people filed an online petition, asking the presidential office to stop the clampdown against cryptocurrency trading.

South Korea's financial authorities have stepped up monitoring of cryptocurrency trades as they warned that a bubble may be set to burst.

Currently, financial authorities ban banks from offering virtual accounts, which are needed to sell or buy cryptocurrencies, to individual customers, the latest measure to help prevent speculative investment for virtual coins.

Opening anonymous cryptocurrency accounts is also banned until banks install a system that ensures only real-name bank accounts and matching accounts at cryptocurrency exchanges to be used for deposits and withdrawals.

In a move that could further rattle the local cryptocurrency market, one of the major retail banks in South Korea, Shinhan Bank, decided not to offer anonymous cryptocurrency accounts for cryptocurrency trading.

As for cryptocurrency investors using Shinhan Bank's current anonymous accounts, the bank will ban them from depositing money into the accounts starting Monday.

State-run Industrial Bank of Korea followed suit, according to officials at financial authorities.

Cyrptocurrencies, such as bitcoin and ethereum, have rapidly gained popularity in recent years among South Korean investors hoping to make quick money.

South Korea is home to one of the world's biggest private bitcoin exchanges, with more than 2 million people estimated to own some of the best-known digital currency.

Despite a boom in cryptocurrency transactions, the exchanges go largely unregulated in South Korea, as they are not recognized as financial products. There are also no rules for protecting virtual currency investors.