South Korean exchanges begin to ban foreign residents from trading cryptocurrencies. Will Japan become the only one to dominate?

Several South Korean exchanges have announced that they will ban foreign residents from trading cryptocurrencies.

Tighter cryptocurrency regulation

The South Korean government is the main reason for the recent turmoil in the global cryptocurrency market, as rumors have spread that they are planning to ban cryptocurrency trading across the country. Soon after the announcement, the total market value of the cryptocurrency market dropped by nearly 50%, causing significant financial losses to many traders around the world.

Later, government officials said that the digital currency exchange ban was just a potential measure to implement regulations. Since then, the market value of the cryptocurrency market has stabilized at around $620 billion, after previously falling to $428 billion. The new regulations are intended to curb South Korean exchanges from allowing unverified accounts to trade digital assets. Exchanges that do not fully comply with KYC and AML procedures may be banned by the new regulations.

Foreign residents are prohibited from trading

South Korea is not the only country to regulate cryptocurrency trading. In late 2017, Chinese regulators forced major exchanges to shut down their operations. The closure of Chinese trading platforms led to a large influx of Chinese traders to other exchanges located in South Korea, Japan, Singapore, and Hong Kong.

A recent article from Trustnodes reported that Korbit, one of South Korea’s major cryptocurrency exchanges, will ban foreign residents from trading cryptocurrencies. The report said:

If you are not a South Korean citizen, KRW deposits to domestic cryptocurrency exchanges will cease when you switch to the new Korean won (KRW) deposit method in January. This applies to both domestic residents and non-residents.

The report said regulators also plan to limit capital flight through cryptocurrencies to $50,000. Experts also believe that South Korea’s new regulations may also force Western cryptocurrency companies to stop doing business in South Korea or even leave the country completely. Analysts believe that more cryptocurrency companies may move from China and South Korea to Japan, which now has more favorable cryptocurrency and blockchain regulations.