South Korea’s Stricter Regulations on Privacy Coins: What You Need to Know

Recent Developments in South Korea’s Crypto Regulations

On November 3, South Korea’s Financial Services Commission (FSC) dropped some serious news about the future of digital assets in the country. They’ve tightened the leash on virtual asset service providers, putting them on notice that handling digital currencies with a high risk of money laundering is officially off-limits. If you thought crypto was the wild west, think again!

What Are These High-Risk Digital Assets?

The FSC’s latest amendments aim specifically at privacy coins, earning their notorious reputation as ‘dark coins’ due to their elusive transaction records. These cryptocurrencies—think Zcash (ZEC), Monero (XMR), and Dash (DASH)—present challenges for regulatory bodies trying to keep an eye on the financial shenanigans.

The Special Payment Act Explained

Under the Special Payment Act, which serves as the central legal framework for cryptocurrency in South Korea, the rules are about to get a major overhaul come March 2021. Existing exchanges will need to sharpen their game, incorporating robust Know Your Customer (KYC) and anti-money laundering (AML) practices. It’s like asking baking enthusiasts to learn how to make soufflé after years of pancakes!

Key Points of the Special Payment Act

• KYC Measures: Exchanges must verify the identity of users against official personal data, including national identity numbers.
• Reporting Obligations: Exchanges must report their operations within six months following the law’s enactment.
• Privacy Coins Ban: Handling of privacy coins is strictly prohibited for virtual asset service providers.

The Crypto Exchanges’ Response

Local cryptocurrency exchanges seem to be beating the regulatory drum early. Many have already shunned privacy coins due to international guidelines. For instance, in September 2019, the South Korean arm of the cryptocurrency exchange OKEx decided privacy coins were no longer welcome, removing ZEC, XMR, DASH, Horizen (ZEN), and Super Bitcoin (SBTC) from their offerings. Talk about an unwelcome party crasher!

What’s Next for Privacy Coin Enthusiasts?

With these regulations tightening, what does the future hold for privacy coin aficionados in South Korea? For now, it seems the path is a bit cloudy. As exchanges adapt to these new rules, customers who have invested in privacy coins may be left wondering if their assets are safe or just too risky. As the old saying goes, better safe than sorry, and this time, South Korea is all in on safety.