South Korea’s FSC to Ban Privacy Coins From Licensed Operators
The Financial Service Commission (FSC) in South Korea will ban privacy-centric digital assets or “dark coins” from crypto exchanges. Also, Virtual asset providers will no longer be allowed to handle transactions involving privacy coins.
In an official announcement on the 3rd of November, the Financial Services Commission stated its privacy coins position. According to the announcement, there have been updates to the current regulations for exchanges with privacy coins. The regulation in concern is the Special Payment Act that offers guides on the legal status of cryptocurrencies. Aso, the regulation has been amended to ban dark coins (i.e., untraceable privacy coins) that present high money-laundering risks.
The new amendment highlights popular privacy coins like Monero (XMR), Zcas (ZEC), and Dash (DASH). These cryptocurrencies achieve privacy by concealing the sender’s wallet address, the receiver, and the amount of transaction. Thus users can make a transaction with utmost privacy. This is possible because of the techniques used in their protocols. Monero uses Ring Signatures, Stealth Addresses, and Ring Confidential Transactions, ZCash uses zk-snarks, and Dash uses CoinJoin.
Furthermore, the Financial Service Commission (FSC) expects to see this amendment effected by March 2021 and calls for crypto exchanges and other services to take accountability. This will be leveraged for effective anti-money laundering (AML) and Know Your Customer (KYC) policies.
Crypto exchanges in South Korea are obligated to report on their operations within six months after the law is enacted. They will also be required to confirm and verify their customers’ real names with effective and strict anti-money laundering (AML) and Know Your Customer (KYC) policies.
History of Crypto Adoption in South Korea
Over the past few years, South Korea has been at the forefront of the cryptocurrency boom. It is one of the few countries with wide-scale adoption of the technology. A survey during the crypto craze era in 2017 showed that more than a third of the country’s workers were active investors in cryptocurrencies, like Bitcoin, Ethereum, and other systems.