Bithumb, the major South Korean cryptocurrency exchange, announced that it has partnered with Chainalysis, the crypto forensics firm, following the passing of new Korean crypto regulations on March 10, 2020.
@Cointelegraph Bithumb makes moves to comply with upcoming crypto legislation in South Korea. https://t.co/lTQsz0p2LP pic.twitter.com/QR2p04z9jR — AmaZix Official (@AmaZixOfficial) March 11, 2020
It has been reported that Bithumb will employ Chainalysis’s “Reactor” investigations tool to examine suspicious activity on its platform in a bid to comply with Korea’s recently amended Special Financial Transactions Information Act.
However, certain provisions in the act will take 12 months to come into effect, with the new apparatus expected to be fully implemented after a further six months. As such, all South Korean crypto exchanges must operate with full compliance by September 2021.
Sungmi Lee, Bithumb’s head of compliance, predicts lawmakers to further strengthen the new legislative apparatus in the near future, stating:
“We anticipate further updates following last week’s vote making it even more important for us to have support available in our local language.”
On March 5, South Korea’s National Assembly passed the revised bill, introducing a permit system for the nation’s virtual asset service providers (VASPs).
It has been analyzed that Korean exchanges must now report their operations to the country’s Financial Intelligence Unit, and are required to collect “real name-confirmed accounts” from banks. Reporting failures can be penalized with up to five years in prison or $42,000 worth of fines.
Exchanges must also have their systems certified by the Korean Internet Security Agency (KISA). Due to the time and expense involved in attaining KISA certification, only four VASPs have completed the process so far — Bithumb, Upbit, Coinwon, and Korbit.
Thus, Jason Bonds, the Chief Revenue Officer of Chainalysis, stated:
“As cryptocurrency use in South Korea continues to grow, new regulations such as this will make blockchain analysis solutions like Chainalysis vital for compliance.”