Virtual asset service providers in the country will not be allowed to deal with “dark currencies”.
According to a November 3 announcement by the South Korean Financial Services Commission (FSC), virtual asset service providers within the country will no longer be able to deal with any digital assets that present a high risk of money laundering. These updates were made as part of the Special Payments Act guidelines – regulations that specifically cover the legality of cryptomorphs in South Korea. The Financial Intelligence Unit specifically criticized the “dark currencies,” which would be privacy-focused cryptomorphs, for having records of transactions that are supposedly difficult for the group to track. This could potentially affect the use of privacy currencies such as Zcash (ZEC), Monero (XMR) and Dash (DASH).
The Financial Supervisory Authority’s amendments to the Special Payment Act are expected to apply from March 2021. The project requires existing exchanges to employ sufficient Know Your Customer (KYC) and Anti-Money Laundering (AML) policies. The exchanges must also report their operations within six months of the implementation of the law. In addition to not dealing with privacy currencies, virtual asset service providers are required to confirm the real names of their customers by comparing them with personal data, such as national identity numbers.
Many crypto currency exchanges in the country no longer list privacy currencies due to existing international regulations. In September 2019, the South Korean branch of the OKEx crypto exchange removed the ZEC, XMR, DASH, Horizen (ZEN) and Super Bitcoin (SBTC), citing the guidelines set by the Financial Action Task Force. The local Upbit cryptomode exchange announced in the same month that it would no longer support the three privacy-focused cryptomodes.