In an attempt to tighten control over cryptocurrency exchanges in the country, the South Korean government announced that it wouldbegin monitoring any bank accounts used to work with cryptocurrencies.
The Financial Services Commission also announced that it would monitor the goings-on between local and foreign exchanges.
For money launderers, the practice of buying cryptocurrencies using foreign entities is familiar. This allows individuals and organizations alike to cloak their funds and activities by operating outside the jurisdiction of their local governments.
Although many countries have adopted a “common reporting standard” to ensure communication between governments, this isn’t a catch-all or a guarantee that the concerned authorities will get timely or complete reports of activities.
To counter this issue, the FSC needs to be more active in the monitoring of its own local exchanges, checking wallets for any suspicious activities. Since the Bitcoin blockchain offers transparency in this regard, doing such a thing is simpler than it looks. However, as exchanges like Upbit openly use Zcash, Monero, PIVX, Zcoin, and a few other privacy coins, these activities could still theoretically be masked.
Although this may be a slightly hard-handed move by the South Korean government, it wouldn’t interrupt the flow of cryptocurrency in the country like the raids of Upbit and Bithumb did. To add insult to injury, neither of the exchanges were found to have any issues with the law outside of a rather sizeable tax bill.
To address the issue of privacy coins, this is where the monitoring of bank accounts comes in. If South Korean authorities see irregularities in the amount of money entering and leaving an exchange’s account but nonetheless notice a high trade volume in privacy coins, they could assume that something suspicious is going on in this department.
Even so, with enough skill, a cryptocurrency exchange could still theoretically avoid taxes quite easily.
This article appeared first on Cryptovest
