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South Korea Considers Crypto Mixer Sanctions Following US Lead

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The South Korean government is considering imposing sanctions on the use of crypto mixing services, according to a recent report by the South Korean financial regulator, the Financial Intelligence Unit (FIU). The move would follow the example set by the United States amid growing concern over the use of mixers for illegal money laundering operations.

Cryptocurrency mixing services combine potentially identifiable “tainted” funds with others to obscure the trail back to the original source. While launched for privacy reasons, over time, they have become a common money laundering tool for criminals. As a result, there is considerable risk in using mixers to conceal funds or launder money.

South Korea Weighs Crypto Mixer Rules

According to the report, South Korea’s Financial Intelligence Unit (FIU) has begun discussing introducing regulations around digital asset mixing services similar to those in the US. An FIU official said the talks started after the US introduced sanctions on crypto mixers, adding that discussions are still in the early stages.

The report notes the FIU has just started considering the need for mixer regulations, a process that could take significant time. While few details are available, any new rules would likely restrict or punish the use of mixing services for illegal activities.

Mixers and online gambling sites have the most severe money laundering problems, processing the vast majority of dirty digital currencies. This has led the US government to announce various sanctions against major crypto-mixing platforms.

The first came in August 2022 when the US Treasury Department sanctioned Tornado Cash, a popular mixer. Later, in November 2023, the government announced additional sanctions against the Sinbad mixer over alleged North Korean ties. These actions set a precedent South Korea is now considering following.

Crypto Mixers Obscure Illicit Funds

By mixing potentially identifiable cryptocurrency funds with others, mixers help obscure the trail back to the original source. As a result, over time, they have become a common way for criminals and scammers to launder stolen digital funds, even though they were created to provide users with more privacy.

Figures show that mixers and online gambling sites have the most severe cryptocurrency money laundering problems. They are responsible for processing vast amounts of illegally obtained digital currencies. This has made them a target for regulators and law enforcement seeking to crack down.

As discussions continue in South Korea, additional details around potential crypto mixing regulations will likely emerge. However, early indications suggest the government aims to follow the US lead in restricting their use for illegal money laundering and sanctions evasion. The precedent is set, and South Korea appears poised to take similar action targeting mixer services.

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South Korea’s FSC Issues Crypto Warning Amid US Bitcoin ETF Surge

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South Korea’s Financial Services Commission (FSC) has issued a warning to the US regulators and the crypto market, saying that it may violate the country’s laws and regulations if they allow US spot Bitcoin exchange-traded funds (ETFs) to be listed and traded in South Korea, according to Bloomberg.

The FSC said in a statement on Thursday that it is concerned about the potential impact of US spot Bitcoin ETFs on the stability of the South Korean financial system and the protection of investors. It also said that it plans to review its digital asset rules as overseas regulation changes.

The warning came after the US Securities and Exchange Commission (SEC) approved around a dozen ETFs to directly hold Bitcoin earlier this week, sparking a strong demand from investors. The first batch of US spot Bitcoin ETFs, including offerings from BlackRock Inc. and Fidelity Investments, saw some $4.6 billion of shares change hands in a frenetic Wall Street debut on Thursday.

The news sent shockwaves through the crypto market, as many South Korean crypto-related stocks plunged in early Friday trading. Wizit Co., a leading crypto exchange operator, dropped as much as 13%, and other stocks such as Upbit Co., Coinplug Inc., and Bitget Co. also suffered heavy losses.

FSC Warning Raises Concerns In Crypto

South Korea is known for being one of the most crypto-friendly countries in the world, with a digital assets bill passed last year to bolster investor protection and innovation. However, consumer safeguards have been in focus since the more than $40 billion implosion of tokens created by Do Kwon, a former Samsung executive who was accused of fraud and money laundering.

The FSC’s warning could signal a shift in its stance on crypto assets, which have been subject to frequent crackdowns by the government in recent years. The FSC has previously banned initial coin offerings (ICOs), virtual asset service providers (VASPs), and online gambling platforms involving cryptocurrencies.

The FSC’s warning could also affect the prospects of more crypto ETFs being launched in South Korea or elsewhere, as it may create legal uncertainties and regulatory hurdles for both local and foreign issuers. The SEC has not yet announced whether it will approve any more spot Bitcoin ETFs.

Industry backers see the US spot Bitcoin ETFs as the ultimate springboard for broader mainstream adoption by everyday investors and the catalyst for further gains. However, some analysts warn that there are still many risks and challenges ahead for both the US regulators and the crypto market.

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South Korea Targets Crypto Risks: Proposed Ban On Credit Card Purchases

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In a bid to curb potential illegal outflows and money laundering, South Korea’s top financial regulator, the Financial Services Commission (FSC), is proposing significant changes to the country’s credit finance laws. The proposed amendments aim to prohibit local citizens from using credit cards to purchase cryptocurrencies, particularly from foreign exchanges.

Crypto Credit Clampdown

The Financial Services Commission Notice released detailed information about the proposed changes. The primary reasons cited for the revision of the Enforcement Decree of the Credit-Specialized Financial Business Act include concerns about the illegal outflow of domestic funds overseas, potential money laundering risks, speculative activities, and the encouragement of speculative behavior.

One of the key modifications outlined in the proposed amendments is the expansion of the scope of prohibited credit card payments. The draft specifies that payments for virtual assets, as defined by the “Act on the Protection of Virtual Asset Users,” will be prohibited. This move is intended to address concerns about the outflow of funds to overseas virtual asset exchanges.

The FSC also aims to resolve regulatory arbitrage related to the limit on providing economic benefits when recruiting new credit cards. Currently, there are varying limits for online and offline recruitment methods. The proposed amendment seeks to standardize the limit to 100% of the annual fee, irrespective of the recruitment method, thus eliminating regulatory differences.

In addition, the proposed changes include an increase in the usage limit of prepaid cards. The existing law caps the maximum issuance amount at 500,000 won, but the amendment acknowledges the need to accommodate the increasing unit price of child meal payments. Accordingly, the maximum issuance amount for children’s meal cards is set to be raised to 1 million won, aiming to alleviate inconveniences caused by exceeding the current usage limit.

Lastly, the FSC aims to diversify funding methods for credit finance companies by expanding the assets that can be securitized. The current limitation to assets related to the companies’ own business, such as installments and leases, will be broadened, allowing credit-specialized financial companies to explore alternative means of raising funds.

The proposed amendments underscore South Korea’s commitment to strengthening regulatory measures surrounding cryptocurrency transactions, reflecting a broader global trend toward increased scrutiny of the digital asset market. The FSC encourages public input on these proposed changes, emphasizing transparency in the decision-making process.

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South Korean Lawmakers’ Crypto Trading Faces Scrutiny: Report

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Lawmakers in South Korea have come under intense scrutiny after an Anti-Corruption and Civil Rights Commission inspection uncovered widespread involvement in cryptocurrency trading. From May 30, 2020, to May 31, 2023, the investigation encompassed all 298 sitting lawmakers, revealing substantial irregularities in some instances.

According to a recent report, the exhaustive 90-day examination revealed that 18 lawmakers possessed virtual assets, with 11 actively participating in trading. Transactions totaled 62.5 billion won ($48.4 million) for purchases and 63.1 billion won ($48.8 million) for sales, prompting questions about the nature of these dealings and their potential gains. However, the detailed report left the motives and implications of these transactions open to interpretation.

Lawmakers’ Cryptocurrency Holdings Revealed

The commission’s exhaustive report provided insight into the wide variety of virtual assets these lawmakers hold, revealing holdings across 107 different cryptocurrencies. Notably, Bitcoin emerged as the most prevalent among these holdings, reflecting a parallel trend observed in the expansive global cryptocurrency market.

Moreover, discrepancies surfaced in the transaction and holding records of 10 lawmakers compared to their earlier voluntary declarations this year. One lawmaker conducted 49 cryptocurrency transactions without reporting them to the National Assembly, referring to an account with a now-defunct cryptocurrency exchange.

Ethical concerns emerged regarding the timing of some transactions. The commission noted that changes in virtual asset holdings for three lawmakers coincided with their involvement in standing committee meetings. Although these actions did not breach conflict of interest prevention laws, they raised significant concerns about the legislators’ commitment to their parliamentary duties.

Responding to these revelations, the commission proposed new parliamentary regulations mandating lawmakers to report their virtual asset holdings. This initiative aims to enhance transparency and accountability within the National Assembly, especially given the upcoming term following the April 10 general elections.

The investigation highlights the need for clearer regulations and ethical guidelines governing lawmakers’ involvement in virtual asset trading. As cryptocurrencies gain wider acceptance, establishing robust frameworks to manage their utilization by public officials becomes increasingly imperative.

Bitcoin SV (BSV) Soars 60% Amid South Korean Frenzy

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Bitcoin SV (BSV), a fork of Bitcoin Cash (BCH), has seen a remarkable price increase of over 60% in the last 24 hours. The cryptocurrency, which claims to follow the original vision of Bitcoin creator Satoshi Nakamoto, reached a new 52-week high of $92.50 on Thursday, December 28, 2023.

The main factor behind the BSV price surge seems to be the strong demand from South Korean investors, who accounted for more than two-thirds of the global trade volume. According to data from CoinMarketCap, Upbit, a leading South Korean crypto exchange, recorded BSV trades worth $520.21 million in the past 24 hours, representing a 68.23% share of the total market.

The BSV trade volume increased by a staggering 553.23% in the same period, reaching $770 million. This indicates that BSV has gained popularity among South Korean crypto enthusiasts, who may see it as a viable alternative to Bitcoin or Bitcoin Cash.

BSV 1D graph coinmarketcap
Source: CoinMarketCap

BSV Still Far from Its All-Time High

Despite the impressive price rally, BSV is still far from reaching its all-time high of $491.64, which it achieved in April 2021. Since then, the cryptocurrency has lost over 82% of its value, as it faced several challenges and controversies.

One of the main issues that BSV faced was the legal dispute between its main proponent, Craig Wright, and the estate of his former business partner, Dave Kleiman. Wright, who claims to be Satoshi Nakamoto, was accused of stealing billions of dollars worth of Bitcoin from Kleiman, who died in 2013. The case, which is still ongoing, has cast doubt on Wright’s credibility and reputation.

Another challenge that BSV faced was the lack of support from major crypto platforms, such as Coinbase, Binance, and Kraken, which delisted the coin in 2021, citing its hostile behavior and fraudulent claims. BSV also suffered from several network issues, such as low hash rate, security vulnerabilities, and spam attacks, which affected its performance and reliability.

South Korea Moves Towards Crypto Regulation

The increased interest in BSV from South Korea may also be related to the recent developments in the country’s crypto regulation. On December 27, 2023, the South Korean government announced that public officials must disclose their crypto holdings as part of a broader effort to prevent corruption and illegal activities involving digital assets.

The move was seen as a positive sign for the crypto industry, as it shows that the government is taking steps to recognize and regulate the domain rather than banning or restricting it. A regulated crypto environment may provide more security and confidence for investors, who may be more willing to explore different options and opportunities in the market.

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South Korea To Reveal Crypto Assets Of Top Officials Next Year

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The South Korean government recently announced new measures aimed at increasing transparency around public officials’ assets, including their holdings of cryptocurrencies. The move follows recent revisions to the country’s Public Official Ethics Act, which requires more detailed reporting around virtual assets like cryptocurrencies.

On December 27th, The Ministry of Personnel Management reported that 5,800 high-ranking public officials must register their property details, including crypto assets, on the government’s “Public Ethics and Transparency Initiative” system. This online portal allows the public to access and review the disclosures of property of public officials.

The new disclosure rules follow the passage of two bills in May that made digital assets part of the annual asset declaration required for elected and high-ranking government officials. The bills were part of a broader legislative package of 19 crypto-related bills that aimed to protect investors better and regulate the crypto industry.

The bills gave the Financial Services Commission (FSC) and the Bank of Korea the authority to oversee crypto operators and asset custodians and imposed stricter anti-money laundering and consumer protection measures. The bills also required domestic companies to disclose their virtual asset holdings from next year as part of the new accounting rules.

Crypto Exchanges To Develop Separate System

The Ministry of Personnel Management said that the five major domestic crypto exchanges — Upbit, Bithumb, Coinone, Korbit, and Gopax — plan to develop a separate information system in June next year, which could be used for property registration. The ministry said that the system will help streamline the disclosure process and prevent errors or omissions.

We expect that the transparency of the public service community will be further increased through the implementation of an integrated service for public official property disclosure and property registration of virtual assets, said Kim Seung-ho, the Director of Personnel Management.

Asset disclosure details, which were previously made individually through official gazettes or gazettes by the public service ethics committees of each institution, such as the government, the National Assembly, the Supreme Court, and the Constitutional Court, will be provided collectively in the revamped public service ethics system starting next year.

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South Korea Mandates Crypto Interest For Investors by July 2024

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The Financial Services Commission [FSC] in South Korea has issued a crucial directive requiring digital asset investors to receive interest on their deposits by July 2024. Notably, this legal mandate excludes nonfungible tokens [NFTs] and central bank digital currencies [CBDCs]. Recent reports from local news sources suggest that certain tokens, classified as NFTs but functioning as a payment method and issued in substantial quantities, may be considered part of the virtual asset category. If included, users could earn interest when depositing these tokens into exchanges.

The notice encompasses guidelines for managing and operating user deposits for virtual asset operators, stipulating the segregation of user deposits from the firms’ assets, which are to be entrusted to banks. A key requirement is that “virtual asset business operators must also store more than 80% of the economic value of users’ virtual assets in cold wallets.”

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South Korea Mandates Crypto Interest For Investors by July 2024 4

Crypto business operators in South Korea are also obligated to prepare for hacking and computer accidents by obtaining insurance, participating in mutual aid, or accumulating reserves. More than 5% of the economic value of virtual assets stored in a hot wallet must be insured with a compensation limit or held as a reserve. The prescribed minimum standards are 3 billion won for won market exchanges [facilitating transactions between won and coins] and 500 million won for coin market exchanges [supporting transactions between coins] or wallet/custodian services.

South Korea Regulator Issues Ban On Funds Blocking

Furthermore, the South Korean regulator clarified rules about insider trading in virtual asset businesses that mirror those in the stock market. If important information is disclosed by a virtual asset business on an exchange, it is considered public after a 6-hour period. The directive expressly prohibits blocking users’ deposits and withdrawals, except in cases of computer failure, hacking, or as required by courts, investigative agencies, and financial authorities under applicable laws and regulations.

The directive imposes an obligation to monitor abnormal transactions on virtual asset exchanges. In the event of suspected unfair trade practices, financial authorities must be promptly notified, and if adequately substantiated, the matter must be reported to an investigative agency. The directive expressly forbids virtual asset deposit and management businesses, such as Haru Invest and Delio, from suddenly suspending deposits and withdrawals, a practice that drew controversy in June of the previous year.

South Korea’s NPS Takes Crypto Leap: Scores 40% Profit with Coinbase Stock Investment

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South Korea’s largest investment group, the National Pension Service, delved into the world of crypto assets, purchasing approximately $20 million worth of Coinbase shares in the third quarter. The acquisition marked a pivotal moment as it was the first instance of the National Pension Service including a virtual asset-related company in its U.S. stock investment portfolio.

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South Korea's NPS Takes Crypto Leap: Scores 40% Profit with Coinbase Stock Investment 6

NPS 40% Profit Surge in Q3 Crypto Gamble

According to news1 report, the National Pension Service invested in around 26 billion won worth of Coinbase stocks listed on Nasdaq, with an average purchase price per share of $70.5. The move proved astute, as the pension fund notched a remarkable 40% profit in just one quarter, reflecting the dynamic nature of the virtual asset market.

Details emerged from the stock holdings report submitted by the National Pension Service to the U.S. Securities and Exchange Commission (SEC) on the 16th, revealing the acquisition of 282,673 shares of Coinbase stock during the third quarter. The total valuation amounted to $19,934,100, translating to 26.1 billion won.

Coinbase, recognized as the largest virtual asset exchange in the United States and listed on Nasdaq in April 2021, experienced a notable surge in stock prices following a rally in Bitcoin. As Bitcoin achieved its highest level in 18 months on the 9th, Coinbase’s stock soared 5.14% from the previous trading day to $92.86.

The National Pension Service’s strategic move contrasts with its historical reluctance to directly invest in virtual assets due to their inherent volatility. In 2021, the pension fund faced criticism from the National Assembly after it was revealed that one of its funds had invested in a crypto asset-related business. At that time, the National Pension Service clarified that its investment was limited to the exchange, emphasizing that virtual assets were not a direct investment target for the pension.

Moreover, with Bitcoin displaying strength subsequent to the National Pension Service’s acquisition of Coinbase shares, the pension fund appears to be reaping substantial profits. The current closing price of Coinbase at $98.15 compared to the National Pension Service’s average purchase price of $70.5 signifies an impressive profit margin of approximately 40% in just one quarter.

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Crypto Holdings Disclosure for Election Candidates Enforced by South Korean Democratic Party

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In a recent development, the Democratic Party of South Korea has instituted a new policy regarding crypto, mandating prospective candidates for the upcoming general elections to disclose their virtual asset holdings, including cryptocurrencies, as per The Korea Economic Daily

This directive, communicated by Han Byung-do, the chairman of the Democratic Party’s Strategic Planning Committee, originates from deliberations within the party’s general election planning team. The primary goal is to ensure candidates uphold the highest moral standards and avoid potential conflicts of interest related to cryptocurrency ownership.

Crypto Holdings Policy


Chairman Han emphasized the importance of this policy, stating, “The consensus was that the verification of candidates should be strictly strengthened based on morality.” He cautioned that candidates providing inaccurate reports on their crypto holdings may face legal repercussions, including the nullification of their candidacy.

Han highlighted,

“If you make a false report, you will be legally held responsible for it,” and “If you are found, you will face correspondingly strict measures (cancellation of candidacy, etc.).”

“However, (holding virtual assets) itself cannot be questioned. Owning it itself is not the problem.” Han added, “If you look into the process of forming the property, you can identify problems, so the verification committee will look at the contents and strictly review them.”

This initiative aligns with South Korea’s broader efforts to augment transparency and accountability in the political arena, specifically focusing on crypto-related matters. Concurrently, South Korean authorities have been actively engaged in monitoring and regulating digital assets within the country.

South Korea’s FSS Battle Against IIlegal “Burger Coins”

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In a proactive move, South Korea’s Financial Supervisory Service [FSS] is intensifying its oversight of the crypto landscape by fortifying the existing Virtual Asset Users Protection Act, enacted earlier in 2023. FSS head Lee Bok-hyeon has announced plans to enforce updated regulations by January 2024, addressing the growing concerns of Korean citizens losing money in volatile foreign-issued cryptocurrencies, colloquially referred to as “burger coins.”

To address these challenges, the FSS head revealed in a press conference that his agency will conduct a comprehensive audit on October 17. The audit aims to establish rigorous standards for listing procedures, internal controls, and the issuance and distribution of virtual assets. Additionally, the FSS plans to implement a robust “virtual asset market supervision and inspection system” to enhance regulatory oversight.

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South Korea's FSS Battle Against IIlegal "Burger Coins" 8

Notably, the FSS is collaborating closely with the Digital Asset eXchange Association [DAXA], a consortium comprising major local crypto exchanges including Upbit, Bithumb, Coinone, Korbit, and Gopax. Lee emphasized the need for detailed regulations, indicating that the existing Virtual Asset Users Protection Act lacked specificity, especially concerning the agency’s authority and criminal liability for violations.

The FSS head stated, “If there is manipulation of distribution volume through staking or unfair disclosure, we will consult with DAXA,” highlighting the agency’s intent to ensure fair practices within the crypto market. He noted the absence of screening systems akin to those in the securities sector, necessitating collaborative efforts to fill regulatory gaps. This proactive approach coincides with South Korean regulators ramping up their vigilance on over-the-counter [OTC] crypto trading, aiming to combat illicit activities linked to digital assets.

South Korea Authorities Flag Down OTC Platforms

Recent reports underscore the heightened vigilance of the nation’s financial authorities concerning OTC crypto transactions, reflecting their commitment to maintaining the integrity and security of the crypto market. As previously reported, investigators revealed instances where OTC platforms served as channels for converting digital assets into Korean won.

A notable case involves the International Crimes Investigation Department of the Incheon District Prosecutors’ Office, which apprehended three individuals for engaging in illegal foreign exchange transactions between October 2021 and October 2022.

These arrested individuals were discovered in possession of digital currencies valued at $71 million, approximately 94 billion won, acquired from foreign OTC platforms under instructions from Libyan clients. They subsequently channeled these unlawfully acquired assets into South Korea, converting them into cash.