South Korea bans anonymous cryptocurrency trading

Bitcoin is trading well below the $11,000 mark after South Korea cracked down on trading in the crypto-currency via anonymous bank accounts.

Bitcoin was sent into another tailspin as investors fretted that the move by authorities, in what is perhaps the most active market for the currency, might lead to a drop in demand.

That followed a down-draft in the currency during the week before after Seoul threatened to ban crypto-currencies altogether.

The regulator was concerned that crypto-currency trading was being used for criminal activities such as money laundering and that it might generate financial instability due to volatility in prices and rampant speculation.

However, the public outcry that ensued following Seoul's threat to ban crypto-currency transactions led regulators in the country to soften their approach

So instead of banning crypto-currency trading altogether, Seoul forbid the use of anonymous accounts, imposing stricter regulations on transactions. The new policy would be effective from 30 January.

Those wishing to trade in the market will now be asked to use bank accounts with their real name linked to them. Banks would also be asked to monitor exchanges and to refuse customers when illegal activities were suspected as the underlying motive.

Aside from now needing to have their identities confirmed before being allowed to trade, a ban was also placed on underage investors and foreigners from opening accounts in South Korea.

Furthermore, a full ban on Bitcoin trading was still a "live option", the government said.

Commenting on the price action in Bitcoin over recent says, ETX Capital's Neil Wilson said: "Bitcoin was on the back foot, sinking back towards $10,000 before paring losses as the market reacted to yet more moves by South Korea to rein in speculation. The crypto-currency remains unable to break through $12,000. That level has been tested on Thursday, Friday and Monday and rejected and now bitcoin seems to be unable to break out past $11,000 and was last trading at $10,500."