It appears that fears of a South Korean ban on cryptocurrency trading are no longer warranted. The South Korean government recently announced new rules to allow cryptocurrency trading within the country. Under the new system, cryptocurrency trading will continue to be allowed, and money can be deposited, withdrawn, or transferred between bank accounts and cryptocurrency exchange accounts.
The catch is that the cryptocurrency exchange accounts must be linked to a registered bank account at one of the six banks participating in the program, and the exchange account must be hosted at the same bank. To put that into perspective for American readers, let’s imagine that you have a bank account at Wells Fargo. If you have a cryptocurrency exchange account, that account too would have to be held at Wells Fargo. Only then could you transfer funds between the two accounts.
While the South Korean government has stated that its aim is to crack down on “speculative” investment, these types of actions are really about cracking down on possible money laundering and, more important to the government, tax evasion. Ensuring that cryptocurrency accounts are tied to bank accounts will make it easier for authorities to collect any taxes that are owed on the profits made from Bitcoin and other cryptocurrency investments.
It’s comforting to see that the South Korean government won’t be trying to implement a full crackdown on Bitcoin and other cryptocurrencies. Since as much as 20 percent of all Bitcoin trading takes place in South Korea, a cryptocurrency crackdown could have had significant short-term effects on markets. News of the South Korean government’s plans may have played a role in boosting Bitcoin’s price in early trading this morning.
For Bitcoin IRA investors, this is another indicator that governments aren’t hostile to the concept of cryptocurrencies in and of themselves, they just want them to work within the same legal, regulatory, and tax framework as all other investments. Since Bitcoin IRAs are already set up to be compliant with all state and federal regulations, any similar government actions in the US wouldn’t have a negative on Bitcoin retirement accounts.