South Korea Considers New Regulations on Crypto Mixing to Combat Money Laundering

Goran Radanovic

South Korea 1

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South Korean financial regulators are moving to formulate specific rules targeting cryptocurrency mixing platforms, aiming to thwart their use by criminal syndicates for money laundering. These discussions focus on whether to empower virtual asset service providers (VASPs) to block transactions linked to these anonymity-enhancing services.

South Korea Considers Crypto Mixing Regulation

Plans are underway in South Korea to potentially implement regulations against crypto mixing services. Reports indicate that the Financial Intelligence Unit (FIU) is contemplating a legal framework to combat the misuse of cryptocurrency mixing platforms by criminal organizations. The key question under review is whether VASPs should have the authority to refuse transactions from addresses that have utilized these mixing services.

South Korea

Crypto mixing involves concealing the origins of transaction funds, a practice scrutinized by global financial authorities. The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has proposed guidelines to increase transparency of such platforms. The Office of Foreign Assets Control (OFAC) has taken action against mixing platforms like Sinbad, linked to North Korea’s Lazarus hacking group, and Ethereum-based Tornado Cash.

The U.S.’s approach to regulating crypto mixers is shaping the regulatory conversation in South Korea. An FIU official noted that discussions in Korea began following the U.S.’s introduction of mixer regulations last year. These preliminary talks are not expected to yield immediate decisions, given the emerging nature of the issue and the current lack of global consensus on how to address it.

Another FIU representative emphasized the global aspect of the mixing problem, calling for international cooperation. The official pointed out that, as these discussions are still in the early stages and the U.S. system is new, in-depth international dialogue is yet to progress significantly.