South Korea’s FSC to forbid privacy coins from exchanges

South Korea's Financial Services Commission, has announced that it is forbidding usage of privacy coins that carries money laundering risk.

By · Nov 5, 2020 . 5min read

South Korea’s FSC to forbid privacy coins news

South Korea’s Financial Services Commission (FSC) will forbid privacy-centric digital assets or “dark coins” from crypto exchanges as they present a high money laundering risk. Virtual asset providing institutions in South Korea will no longer have access to manage privacy coin transactions. Further, this is per an announcement followed on Nov. 3 from the FSC.

South Korea’s regulatory decision to impact various privacy coins

According to the announcement, the regulatory amendments for exchanges were renewed in the Special Payment Act. It is a specific regulation concerning the legal status of cryptocurrency. It states forbidding the privacy coins or “dark coins” as they carry high money laundering risk. The FSC’s new amendment to the Special Payment Act emphasizes privacy-oriented cryptos or privacy coins as dark coins. Additionally, it intends to preserve the integrity of user transactions and identity. The regulatory effect will possibly affect popular privacy coins such as Zcash (ZEC), Monero (XMR), and Dash (DASH).

The FSC’s amendments will be effective by March 2021. It asks exchanges to take responsibility and support Anti-money laundering (AML) and Know Your Customer (KYC) policies. South Korean exchanges have to report their operations in six months of the law coming into effect. Moreover, they will also have to confirm and verify the real names of their consumers.

However, due to enduring international regulations about privacy coins, various crypto exchanges in South Korea do not list “dark coins”. In September 2019, cryptocurrency exchange OKEx’s Korean arm delisted five privacy altcoins. Moreover, it involves Monero (XMR), Dash (DASH), Zcash (ZEC), Horizen (ZEN), and Super Bitcoin (SBTC). Moreover, it complies with the “travel rule” of the Financial Action Task Force (FATF). 

Additionally, local crypto exchange Upbit declared in the same month that it would stop trading support for three privacy-focused cryptocurrencies. UpBit announced that the exchange would delist and terminate trading support for DASH, Monero (XMR), ZCash (ZEC), BitTube (TUBE), Haven (XHV), and PIVX by Sept. 30, 2019. Upbit explained that the reason for delisting these six privacy coins was to prevent the possibility of money laundering and the inflow of funds from external networks. 

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