South Korea Will Impose a Ban on Privacy Cryptocurrencies

South Korea’s financial regulator, the FSC announced on Tuesday its decision to ban privacy cryptocurrencies that possess a high-risk of money laundering.

November 4, 2020 | AtoZ Markets – The Financial Services Commission of South Korea (FSC) will prohibit digital asset service providers from operating domestically with privacy cryptocurrencies. Coins such as Zcash (ZEC), Monero (XMR), and Dash (DASH) may be affected by restrictions.

South Korea FSC to ban privacy cryptocurrencies

The amendments will enter into force in March 2021. They are developed as part of guidelines under the Special Payments Law, which deals with the legality of using cryptocurrencies in South Korea. FSC has turned to privacy coins as it is difficult for the authorities to track the transactions associated with them.

The Commission will also require cryptocurrency exchanges to use the Know Your Customer (KYC) and anti-money laundering (AML) policy and report on their activities. Service providers will be required to verify real usernames. The proposal is to comply with the Financial Action Task Force (FATF) travel rules.

Crypto exchanges continue to delist privacy coins

Earlier, the country’s trading platforms began to abandon anonymous cryptocurrencies. In 2019, the South Korean bitcoin exchange Upbit warned about the delisting of six anonymous coins: Monero, DASH, ZCash, Haven, BitTube, and PIVX.

Read also: Monero Money Laundering Concerns Causes BitbBay to Delist XMR

In the same year, the Korean division of cryptocurrency exchange OKEx announced to delist Monero, ZCash, DASH, Horizen, and Super Bitcoin. The platform later suspended the delisting process for ZCash and Dash.

Recall that in March 2020, the South Korean parliament approved the full legalization of cryptocurrency trading. By September 2021, blockchain companies, bitcoin exchanges, and other industry participants must bring their activities in line with the new rules.

In South Korea, the Internet Promotion Agency (KISA) plans to develop artificial intelligence software that tracks cryptocurrency transactions on the dark web. In past cases, many of the transactions were conducted with XMR to enhance anonymity, thus hampering authorities’ investigations.

There was also concern that cryptocurrency-related dark web transactions in South Korea were on the rise.

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