South Korea Will Ban Domestic Circulation of Privacy Coins

The new law will come into effect in March 2021.

South Korea’s Financial Services Commission (FSC) announced on Tuesday its decision to ban anonymous digital currencies that possess a high-risk of money laundering.

The regulator has added these new guidelines in its existing under the Special Payment Act, which specifically covers the legality of cryptocurrencies in South Korea. The new rules will come into force in March next year, barring all domestic cryptocurrency exchanges from offering services with such privacy coins.

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The commission termed these cryptocurrencies as ‘dark coins’ and highlighted the difficulties in tracing the transaction of these digital currencies. 

This ban will affect the domestic circulation of some of the popular privacy coins, including Monero, DASH, and Zcash.

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Furthermore, the FSC will mandate the KYC and AML policies on all domestic cryptocurrency exchanges, and they have to confirm the users’ real names by verifying them against their personal identities. Additionally, the exchanges need to report their operational activities with the regulator.

Hostility Towards Privacy Coins

Though the market watchdog has decided to curb the circulation of privacy coins now, hostility against these cryptocurrencies were already prevalent. 

Multiple South Korean crypto exchanges are already delisting privacy coins due to prevailing international regulations. The South Korean arm of OKEx delisted Zcash, Monero, DASH, Horizen (ZEN), and Super Bitcoin (SBTC) in September 2019, citing the Financial Action Task Force guidelines. But, the platform later suspended the delisting process of Zcash and Dash.

Upbit, another local South Korean crypto exchange, also delisted and ceased the trading of several cryptocurrencies, including three privacy coins due to money laundering concerns.

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