South Korea to Track Crypto Transactions
While crypto regulations as a whole have been on the rise globally, South Korea has been especially proactive in its treatment of the crypto industry. Take last year following the FTX saga where regulators began looking into local exchanges to review their treatment with regard to their native tokens.
Now, South Korea is taking these efforts to another level as its Ministry of Justice has announced new plans to combat money laundering using cryptocurrency. This will be done through a new “Virtual Currency Tracking System” that will trace the origins of crypto funds to ensure their legitimacy.
Crypto Under Scrutiny
In terms of criticism of cryptocurrency, one of the most common is the claim that it will be used for criminal activities such as money laundering. The idea is that because cryptos are based on a decentralized system, they are harder to track and thus, a potential tool for criminals.
The Korean government intends to combat this by tracking the relevant details that relate to crypto transactions. These include the source of the funds in question before and after their remittance which could help catch ill-gotten funds before they are sent or received. Needless to say, this is a very modern solution to a rather modern problem.
“We will overhaul the forensic infrastructure (infrastructure) in response to the modernization of crime,” said the ministry of justice.
These tracking plans will reportedly be done in two parts; the first will be the ‘national digital forensic cloud system’ which will go into operation within the first half of the year. This will be based on the existing digital forensic system so that other government agencies will find the system easy to replicate. And regulators are also getting some help from crypto exchanges as the police force signed an agreement with five South Korean crypto exchanges. The exchanges will help the police in their investigations of crypto-related crimes and will help prevent any damages due to these crimes.
A local report highlighted the efforts of the Cyber Investigation Bureau of the National Police Agency in combating the issue. Personnel within the Bureau are reportedly studying the use of cryptocurrency for crime as well as activities on the dark web and tracking the cryptos used in both cases.
The Need for Regulation
It is clear that cryptocurrency is not going anywhere anytime soon and this means that regulators need to adapt to the new financial environment that they have created. The South Korean government seems prepared to do just this as evidenced by this new tracking program.
This program means that the origins and destinations of cryptos sent within the country can be monitored and crime potentially prevented. Usually, as crypto regulations increase, businesses such as crypto exchanges also come under more scrutiny but it seems that in this case, they have been given the opportunity to work with the police.
And while these measures are certainly aggressive, they are in response to the financial landscape we now find ourselves in and work towards the protection of consumers.