South Korea Rejects Proposal to Allow Securities Companies to Issue Encrypted Asset Real-Name Accounts
On March 3, the South Korean financial authorities decided not to expand the issuing institution of the encrypted asset real-name account required by the encry…
On March 3, the South Korean financial authorities decided not to expand the issuing institution of the encrypted asset real-name account required by the encryption exchange to outside the bank. People in the financial industry have put forward a plan to allow securities companies to issue encrypted asset real-name accounts, but the financial authorities of the country said that compared with banks, securities companies and other financial companies have relatively low ability to prevent money laundering. In addition, in the event of losses and closure of the exchange, the financial companies that open accounts may also have various burdens, so it is necessary to be responsible by institutions with sufficient financial capacity. In addition, allowing securities companies to issue real name accounts for virtual assets runs counter to the strict policy orientation, and due to the proliferation of exchanges that can trade Korean won, investment foam may occur.
The South Korean financial authorities rejected the proposal of “allowing securities companies to issue encrypted asset real-name accounts”
Interpretation of the news:
The South Korean financial authorities have recently decided against permitting securities companies to issue encrypted asset real-name accounts, involving virtual currencies, to customers. Encrypted asset real-name accounts are a measure introduced by the South Korean government in January 2018 to create increased transparency and reduce the risk of illegal activities in virtual currency trading by linking traders’ bank accounts with personal identification numbers. This measure requires traders to open a real-name account with a domestic bank in South Korea, and it is mandatory for all domestic and foreign virtual currency exchanges operating in the country.
The move to allow securities companies to issue real-name accounts for virtual currencies was proposed by some financial industry professionals, but it was rejected by the South Korean financial authorities citing several reasons. The authorities stated that securities companies lack the ability to prevent money laundering, and in the case of an exchange closing down or incurring losses, companies issuing accounts may face various burdens. Therefore, it is necessary to restrict the issuing responsibilities to institutions with sufficient financial capability.
Moreover, permitting securities companies to issue real-name accounts for virtual currencies would contradict the government’s strict policy orientation. With the rise of new exchanges that can trade the Korean won, investment foam may become a major issue, which may trigger significant consequences leading to financial risks and insecurity.
In conclusion, the South Korean government, in its efforts to reduce illegal activities in virtual currency trading and promote transparency, denied the proposal to expand the issuing institution of the encrypted asset real-name account. The focus remains on the need for institutions with sufficient financial capability, such as banks, to prevent money laundering and protect customers from the consequences of exchange closures and losses.
Keywords such as investment foam, money laundering, and financial institutions highlight the authorities’ fight against illegal activities in virtual currency trading. Additionally, the proposal’s rejection emphasizes the importance of having institutions with robust financial capabilities in the handling of virtual currencies.
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