South Korea to follow US example on crypto mixers: report

The South Korean government is reportedly considering imposing sanctions on crypto-mixing services.

According to a report in a local publication, South Korea's financial regulator plans to introduce new regulations on digital asset aggregator services similar to those in the United States.

South Korea's financial regulator, the Financial Intelligence Unit (FIU), is said to be working on legislation to regulate the use of crypto-mixing services. The report noted that the financial regulator had only just begun discussions on the need for regulation.

An FIU official revealed that the discussions began in Korea when the US imposed sanctions on crypto mixers. The official said that the discussion about new rules is in the first stage and the US is part of the discussion.

A cryptocurrency mixing service combines identifiable or “contaminated” cryptocurrencies with others to obscure the path to the original source of the funds. While these services started out with a focus on privacy, allowing the sender to hide their key details, over the years, it has become a common way for fraudsters and hackers to launder stolen funds.

As a result, there is a great risk in employing crypto mixers to misappropriate funds or hide income. Mixers and online gambling sites have very serious counterfeiting issues, and process a lot of dirty currencies. This has led the US government to impose various sanctions on popular crypto-mixing service providers in recent years.

RELATED: Blockchain Association Supports Lifting Tornado Cash Sanctions

The first sanctions came in August 2022 when the US Treasury Department announced sanctions against Tornado Cash, a popular crypto-hybrid service. Later, in November 2023, the government announced new sanctions against Sinbad, accusing it of North Korean ties.

Magazine: Tornado Cash 2.0: The Race to Build Safe and Legal Coin Mixers