The anonymous, encrypted nature of cryptocurrencies such as Bitcoin and Ethereum have made them popular in some circles of illegal activity. As a relatively new type of currency, cryptocurrencies remain largely unregulated throughout the world, which means there is a lack of regulation in place to protect ordinary people and investors from fraud and other scams. Currencies like Bitcoin have proven especially popular with money launderers, particularly in certain parts of Asia.
South Korea cracks down on money laundering
South Korea is one of the world’s top traders of cryptocurrencies. The country is home to one of the largest Bitcoin exchanges in the world; it’s currently estimated that over a million South Koreans have money in Bitcoin, putting it just behind the US, China and Japan in terms of global Bitcoin markets, while the country actually tops out the list of global Ethereum markets (https://cointelegraph.com/news/south-korea-is-becoming-bitcoin-and-ethereum-powerhouse). It’s no surprise then that the country is facing a scandal in the numbers of criminals using Bitcoin and Ethereum as a means to launder money.
In response to this issue, South Korea’s top financial regulator has announced the country’s plans to draw up strict measures to protect the country against money laundering through cryptocurrencies, though it is, as yet, unclear what these measures will entail. The news comes not long after announcements that the country will be banning Initial Coin Offerings (ICOs) in another effort to crack down on fraud.
The announcement was made by Kim Yong-beom, the Vice Chairman of the Financial Services Commission in South Korea. “We will draw up thorough countermeasures that prevent cryptocurrencies, like Bitcoin, from being a new channel for money laundering,” he said at a forum organised by the country’s Financial Intelligence Unit.
The future of money laundering
Using currencies like Bitcoin as a means of laundering money is potentially just a flash in the pan. Just last month, Larry Fink, CEO and Chairman for BlackRock, told Bloomberg (https://www.bloomberg.com/news/articles/2017-10-03/larry-fink-says-cryptocurrencies-show-level-of-money-laundering) that a true global digitised currency would essentially wipe out the need for money laundering as a process. Of course, this would bring its own problems, and in many ways make it even easier for illegal activity to fly under the radar. Exactly what regulations are needed to combat this drawback to cryptocurrencies, only time will tell.