Bithumb crypto exchange announced on March 10 that it has partnered with crypto forensics firm Chainalysis. The exchange was pushed to form this partnership after the passing of several new Korean crypto regulations.
The South Korean crypto exchange plans to use Chainalysis’s “Reactor” investigations tool to thoroughly review and analyze and solve all suspicious activities on its platform. The move comes in a bid to comply with Korea’s recently amended Special Financial Transactions Information Act.
Crypto exchanges must abide by the new regulations by 2021
Several provisions in this act are designed to take 12 months to come into effect. The new apparatus is expected to have become fully implemented after a further six months. In that context, all the South Korean crypto exchanges need to operate with full compliance by September 2021.
Sungmi Lee, Bithumb’s head of compliance, is convinced that legislators will further strengthen the new legislative apparatus soon, adding:
“We anticipate further updates following last week’s vote making it even more important for us to have support available in our local language.”
Non-compliance attracts a 5-year imprisonment sentence
South Korea’s National Assembly passed the revised bill on March 5. At that time, the Assembly introduced a permit system for the nation’s virtual asset service providers (VASPs). All the Korean exchanges must now report their operations to the Financial Intelligence Unit of the country.
Also, they are needed to collect “real name-confirmed accounts” from banks. Reports of any failures can attract penalties with up to five years in prison or fines worth up to $42,000. The law states that all Korean exchanges must also have their systems fully certified by the Korean Internet Security Agency (KISA).
Just four VASPs have completed the process currently due to the time and expense involved in getting the KISA certification. These four include Coinwon, Bithumb, Korbit, and Upbit.
Jason Bonds, Chainalysis’ chief revenue officer, commented:
“As cryptocurrency use in South Korea continues to grow, new regulations such as this will make blockchain analysis solutions like Chainalysis vital for compliance.”
FATF directives implemented globally
South Korea is one of many other nations that have recently amended their domestic crypto regulations. They did these amendments to meet all the reporting and compliance standards that were recently laid out by the G7’s Financial Action Task Force (FATF).
In February, Ukraine, the United Kingdom, Singapore, Hong Kong, Switzerland, Dubai, South Korea, and Japan updated their crypto guidelines as stipulated by FATF’s directives.
