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South Korea blockchain association plans to change how people trade

  • A South Korean blockchain association announced on Friday measures to boost transparency in trading of cryptocurrencies
  • South Korea is a major global hub for cryptocurrencies and hosts the world's busiest virtual currency exchange, Bitthumb
  • The Korea Blockchain Industry Association said users would only be allowed to trade virtual currency through one account after their identity has been confirmed
Dan Kitwood | Getty Images

A South Korean blockchain association announced on Friday measures to boost transparency in trading of cryptocurrencies, agreed by 14 exchanges in the country including the world's busiest virtual currency exchange, Bitthumb.

Digital currencies are very popular across Asia, with many retail investors giving up their daily jobs to trade them full time in countries such as Japan and South Korea, which together make up for more than half the global trading volumes by some estimates.

The Korea Blockchain Industry Association said in a statement users would only be allowed to trade virtual currency through one account after their identity has been confirmed via traditional financial institutions like banks.

The statement added virtual currency exchanges with more than 2 billion won ($1.83 million) worth in assets would be allowed to operate. Measures, which are not mandatory, will start being imposed beginning Jan. 1 next year, the country's only association for virtual currency exchanges said.

"The regulations will ensure the safety of consumers and transparency in trade and are expected to be the strongest and most effective measures (regarding virtual currency exchanges) on a global scale," said the statement.

Kim Jin-hwa, one of the association's leaders, said exchanges would especially work towards identifying account users.

Drawn by bitcoin's explosive surge of more than 15-fold this year, ordinary South Koreans from housewives to college students and office workers have rushed to mobile-app based virtual currency exchanges in hopes of quick profits despite government-issued warnings.

Despite Friday's announcement, analysts were skeptical the measures would impact bitcoin exchange prices to a great extent.

"Today's announcement is unlikely to affect the (bitcoin) price as exchanges can always decide not to follow," said Park Nok-sun, a cryptocurrency analyst at NH Investment & Securities.

"The measures are positive for sure in that they are actually trying to curb recent speculative investments."

South Korea's cryptocurrency-related shares extended gains after the announcement, with Vidente and Omnitel up 10.3 percent and 3.4 percent respectively near midday.