South Korea’s New Crypto AML Law Bans Trading of “Privacy Coins” (Monero, Zcash) – CPO MagazineNovember 17, 2020
The “privacy coins” that add an extra layer of anonymity to crypto transactions are no longer welcome in South Korea. Coin brands such as Monero, ZCash and Dash will soon be unavailable at the country’s exchanges, with the government citing crypto anti-money laundering (crypto AML) measures as the reason for the ban.
The controversy surrounding privacy coins
The so-called privacy coins were designed to shore up the last remaining transparent public windows into cryptocurrency transactions. Most mainstream crypto coins, such as Bitcoin, are not completely anonymous: at the very least they make public the wallet addresses involved in the transaction as well as the amount. Law enforcement can track these transactions back to crypto exchanges, where the wallet holders can potentially be identified either by the email address they used to register the exchange account or by using personal identification to open it. The privacy coins add a third party process that hides these transaction records, effectively making the parties involved totally anonymous and also making it extremely difficult for law enforcement to track them down.
While privacy coins are not exclusively used for criminal purposes, criminals are most certainly enthusiastic consumers of them. The South Korean Regulator Financial Services Commission (FSC) cites the frequent use of privacy coins (which it refers to as “dark coins”) for ransomware attacks and money laundering as a central reason for the ban, claiming that these transactions are too hard to trace.
Privacy coins with the added protections such as Dash, Monero and Zcash will no longer be offered by the country’s crypto exchanges as of the beginning of March 2021. The new law is an addition to the existing Special Payments Act, a comprehensive cryptocurrency regulation act that was passed in early March of this year. In addition to crypto AML, the new terms require