South Korean financial regulators are reportedly looking to introduce new regulations around the use of crypto mixers in the country, following in the footsteps of the United States.
The South Korean government is reportedly considering imposing sanctions against the use of crypto mixing services.
According to a report by a local publication, the South Korean financial regulator plans to introduce new regulations around digital asset mixing services akin to the United States amid the growing use of mixers for illegal money laundering operations.
One South Korean Ministry of Interior and Safety official revealed that when the U.S. introduced sanctions against crypto mixers, the discussions also started in Korea. The official further revealed that the discussion around new regulations is in the early phase and that the U.S. is part of the discussion.
A cryptocurrency mixing service mixes potentially identifiable or “tainted” cryptocurrency funds with others to obscure the trail back to the fund’s original source. While these services were launched focusing on privacy, allowing a sender to obscure their key details, over the years, they have become a common way for scammers and hackers to launder stolen funds.
As a result, the risk of employing crypto mixers to launder money or conceal earnings is considerable. Mixers and online gambling sites have the most severe money laundering issues, as they process the vast majority of dirty currencies. This has prompted the U.S. government to announce various sanctions against popular crypto-mixing service providers over the years.
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The first sanction came in August 2022 when the U.S. Treasury Department announced sanctions against Tornado Cash, one of the popular crypto-mixing services. Later, in Nov. 2023, the government announced new sanctions against crypto mixer Sinbad, alleging North Korean ties.
Korean financial regulators, the Financial Intelligence Unit (FIU), are reportedly working on legislation regarding using such crypto mixing services. The report noted that the financial regulator has just begun discussions around the need for such regulations, which might take some time to come into force.
South Korean government is reportedly looking to follow in the footsteps of the United States and impose sanctions against using crypto mixing services.
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