Bitcoin drops as South Korea bans anonymous cryptocurrency trading

Bithumb logo in South Korea
South Korea is one of the biggest Bitcoin markets Credit: Reuters

South Korea has banned anonymous bank accounts being used to buy and sell cryptocurrencies, a widely-anticipated move in one of the world's most popular Bitcoin markets.

The measures are designed to prevent children and criminals from trading Bitcoin in a country that has embraced the digital currency amid its rapidly-ascending price.

Bitcoin fell from just under $11,000 (£7,800) to as low as $10,179 on Tuesday morning after the move, as investors feared the crackdown could damage demand. It is trading close to its lowest levels in three months, having halved in value since mid December.

Actions in South Korea have an outsized influence on Bitcoin's price. It is the world's third-biggest market for the digital currency after Japan and the US, and demand has meant the cryptocurrency trading hands at higher prices in the country than elsewhere.

However, the relative lack of regulation has concerned authorities, who fear that money launderers outside of South Korea may be exploiting the relatively light-touch laws.

The new rules, which come into effect at the end of the month, will also ban foreigners without local bank accounts and children under 19 from buying Bitcoin.

Korea's government is still considering an outright ban on the online exchanges where cryptocurrencies are bought and sold, a move that is still believed to be under consideration. "The government is still discussing whether an outright ban is needed or not, internally," an official told Reuters.

Regulation fears have cooled interest in Bitcoin in recent weeks. German and French regulators have also proposed a crackdown to be discussed at a G20 summit in March. British financial regulators have said they are monitoring developments in the market.

Bitcoin's price hit a high of around $20,000 in December and fell under $10,000 last week. On Tuesday morning it recovered slightly from its low to trade at around $10,600.

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