The cryptocurrency space in South Korea accounts for nearly 20% of the world’s crypto-transactions. However, the country’s crypto-industry has consistently been on the defensive against stifling restrictions over the last two years. In light of recent legal amendments approved to ensure that exchanges meet international regulatory standards, Bithumb has developed an identity authentication system called the ‘Value Network Doman Name System’ or VDNS.
“[VDNS] offers users to issue non-public proofs on the blockchain, and a way to authenticate such proofs against the issuer’s domain name linked to their addresses, thereby meeting the demand for transactional privacy as per FATF requirements as well.”
Amendments had been made to the Act on Reporting and Use of Specific Financial Information by the legislative body of South Korea. The amendment had also introduced the Special Financial Transaction Information Act, which is backed by the Korean Blockchain Association and “officially brings the cryptocurrency sector under the purview of the local mainstream economy.”
Notably, Bithumb also stated that real name virtual bank accounts are now mandatory for all exchanges in South Korea, and the same will be under the purview of the Financial Information Analysis Institute, with exchanges now reporting directly to it. Additionally, the release warned that non-compliance could result in a 5-year jail term, as well as a fine of ₩50 million (~$42,000).
This development comes after several exchanges in South Korea delisted certain privacy coins like Monero and Dash due to money laundering concerns and their alleged non-compliance with FATF guidelines.