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South Korea has long been a very important market for crypto exchanges and DeFi platforms.
FTX, for instance, reportedly made a fortune off of the so-called Kimchi Premium, the gap in price between the cost of crypto in South Korea and elsewhere, largely fueled by the need for USD-backed trades, creating opportunities for arbitrage trading.
Unfavorable Press Attention
Although not illegal in and of itself, this method of collecting revenue has been generally frowned upon. Furthermore, South Korea has taken notice of the bad publicity drawn by crypto in the wake of the recent Bithumb raids. It’s worth noting that although Terraform Labs was not headquartered in Korea, the fall of Terra also caused quite a rift in local media outlets.
It’s unclear whether the negative press generated over the past year or so had much of a say in the Korean Government’s decision to fund this tracking system.
Nevertheless, according to a report released by local publication KHGames and outlined by Wu Blockchain, a crypto reporter predominantly working on crypto developments in the APAC region, the Korean government has started developing a system to track digital asset trades and plans to implement it sometime this year.
The South Korean Ministry of Justice will introduce a “cryptocurrency tracking system” in the first half of this year to strengthen the tracking of money laundering and recovery of criminal proceeds using cryptocurrencies. https://t.co/2CLkaLUrX6
— Wu Blockchain (@WuBlockchain) January 29, 2023
End-to-End Coverage of Transactions
The Virtual Currency Tracking System will reportedly monitor the transaction history of crypto users and seek to ascertain the source of the funds used in such transactions before they are remitted to the recipient.
A spokesperson for the Ministry of Justice, the government body reportedly leading the development effort, stated that the tool was necessary given the increased sophistication of methods used by cybercriminals.
“In response to the sophistication of crime, we will improve the forensic infrastructure. We will build a criminal justice system that meets international standards.”
The crypto tracking tool will function as a barrier against cybercrime, increasing the amount of protection crypto investors benefit from in South Korea. Investors already benefit from the agreement Korean Police have with five local big-league crypto exchanges regarding cooperation on digital asset-related fraud and theft.
Neither the exact capabilities of the upcoming tracking system announced nor an exact release date has been provided yet. Nevertheless, further updates should be released by the Ministry of Justice quite soon, taking into account the plans to release the tool before the year is out.
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