South Korea Mirrors U.S. in Contemplating Sanctions Against Crypto Mixing Services
Summary:
The South Korean government is mulling over implementing sanctions against the use of cryptocurrency mixing services, similar to the U.S. This move comes amidst the growing misuse of these services for illegal money laundering. Regulations are in early discussion stages, prompted by the U.S.'s actions, the only country to regulate this area so far. Cryptocurrency mixing services, originally designed for privacy, have become the common method for laundering stolen funds. The new Korean laws are still under development and may take some time to take effect.
In a move mirroring that of the United States, the South Korean authorities are said to be contemplating penalties against the utilization of cryptocurrency mixing services. As per a local newspaper article, the nation's financial regulator contemplates implementing regulations concerning virtual asset blending services, similar to those in the U.S., due to the rising employment of such facilities for illicit laundering actions.
It was disclosed by a Financial Intelligence Unit (FIU) official that when U.S. sanctions against crypto mixers were set in place, talks ensued in Korea too. It was further disclosed that these regulatory discussions are in their preliminary stages, and considering that America is the sole nation with established regulations on this matter, they are definitely targeted in the dialogue.
Essentially, a cryptocurrency mixing service scrambles ostensibly identifiable or "contaminated" crypto funds with other monies, making it difficult to trace back to the principal source. Even though these services were initiated with a focus on privacy, allowing transactors to conceal crucial specifics, they have evolved over time to become a conventional laundering avenue for fraudsters and cyber-criminals.
Consequently, the use of crypto mixers to launder cash or hide income carries a substantial risk. Mixers and internet-based gambling sites experience the most acute money-laundering issues, handling a vast proportion of illicit currencies. This reality prompted the U.S. government to enforce several sanctions upon well known crypto-mixing service providers over time.
This was apparent when the U.S. Treasury Department imposed its first sanction against Tornado Cash, a popular crypto-mixing service, back in August 2022. Then, in November 2023, new sanctions were declared against the crypto mixer Sinbad due to its alleged connections to North Korea.
Reportedly, the FIU, which serves as Korea's financial regulator, is devising laws regarding the use of crypto mixing services alike. The report suggests that discussions on the necessity of such regulations have only just begun and may require some time before they come into effect.
The South Korean authorities, planning to trace the measures of the United States, are believed to be considering penalties for the use of cryptocurrency mixing services.
Tabloid: Tornado Cash 2.0: The competition to construct secure and lawful coin mixers.
Published At
1/15/2024 1:15:00 PM
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