South Korea has been engulfing the entire globe through its cultural soft power. BTS and Korean drama has never been so popular. Along with this cultural takeover of the globe, the country is spearheading the adoption of crypto. South Korea recently legalized crypto in the country by passing a bill to regulate digital assets. However, the latest news from the Asian country suggested a ban on privacy coins.
South Korea To Dodge Abject Money Laundering Risk
Just a year ago, privacy coins had become a big no go for certain regulators. The Financial Action Task Force’s [FATF] Travel Rule was a huge setback for privacy coins like Monero [XMR], Zcash [ZEC] as well as Dash [DASH]. South Korea seems to be on board with this rule as the country decided to put a ban on privacy coins.
As per a recent announcement, the South Korean Financial Services Commission [FSC] revealed on its website that it was going to restrain digital asset providers from engaging with cryptocurrencies that pose a great risk of money laundering. This rule comes as part of the country’s Special Payment Act. Certain rules were put into place by South Korea earlier this year, however, these rules will only be effective since March 2021.
This isn’t the first time privacy coins have been banned in a country over money laundering issues. Japan also laid a ban on these assets. The South Korean regulator also went on to label privacy coins as “dark coin”. Since the information pertaining to the transaction of privacy coins is kept “private” the government would find it difficult to track down or trace the transaction of crypto assets.
While several exchanges have taken a step ahead and delisted privacy coins, the FSC suggested that anti-money laundering as well as ‘Know Your Customer’ policies should be mandated in every crypto platform operating in the country.