This Is South Korea's Firm Step To Prevent Money Laundering Via Crypto
JAKARTA - South Korea plans to set up a crypto mixing platform (crypto mixer), which is a service that can hide traces of digital asset transactions. This step was taken to prevent money laundering and criminal activity using the platform.
According to local media reports, South Korea's Financial Intelligence Unit (FIU) is studying a legal framework that can be applied to cryptocurrency mixing platforms. The FIU will also evaluate whether a virtual asset service provider (VASP) can refuse transactions from addresses involved in mixing.
Cryptocurrency mixing is a process that disrupts the origin of a transaction or a series of transactions, using an algorithm that scores the address of the sender and recipient. The purpose of the mixing is to increase the privacy and anonymity of crypto users, but can also be exploited by criminals to hide traces of dirty money.
Crypto mixing platforms have been targeted by the United States' financial authorities, who consider it a means of criminals tricking the law and disrupting national security.
In October 2023, the Foreign Assets Supervision Office (OFAC) imposed sanctions on punctuation, a mixing platform linked to North Korea's hacker group Lazarus.
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Then, in August 2022, OFAC also highlighted Tornado Cash, an Ethereum-based mixing platform, as an example of a service that can be used to trick authorities.
The United States' stance on cryptocurrency mixing platforms has prompted the South Korean government to discuss regulation of crypto mixer platforms, which is one of the largest cryptocurrency transaction sites in the world. A FIU official said South Korea began considering mixing regulations since last year, when the United States proposed regulations aimed at increasing transparency around the platform.
Even so, cryptocurrency mixing regulations are not easy, given its new and complex characteristics, as well as the lack of international cooperation in dealing with them. Another FIU officer stressed that mixing is a global problem, which requires coordination from each country.