The South Korean government is cracking down on bitcoin, with proposed legislation seeking to limit how conventional banks interact with bitcoin and other cryptocurrencies. The law would prohibit South Korean companies from providing settlement services for cryptocurrency transactions, a crucial part of credit and debit card transactions.
Another set of rules issued earlier this month restricted financial firms from investing in cryptocurrencies more broadly, although the rules also levied capital gains tax on any money conventional investors made from buying and selling the currency.
The proposed law would also prohibit companies from selling bitcoin anonymously, in accordance with the “Know Your Customer” rules implemented as an anti-money laundering practice at banks across the world. Many US bitcoin providers have already adopted know-your-customer procedures, after a number of high-profile money laundering prosecutions against non compliant providers.
There may be even stricter rules on the way. In a statement, the government floated the idea on a nationwide ban on cryptocurrency exchanges, although it’s unclear whether such a ban would be politically or technically feasible. China is the only country to completely ban bitcoin exchanges, a move that relied heavily on the country’s existing web censorship systems.