Bithumb, South Korea’s biggest cryptocurrency exchange alongside UPbit, has banned digital asset trading in North Korea, Iran, Iraq, Sri Lanka, and seven other countries that are considered as high-risk jurisdictions by the Non-Cooperative Countries and Territories (NCCT) Initiative.
Beginning May 28, the Bithumb team stated that to prevent its infrastructure and platform from being used to launder money and finance criminal activities, it has decided to outright ban trading in all of the 11 countries monitored by the NCCT Initiative.
The major South Korean cryptocurrency exchange will no longer accept new users from the 11 countries listed as NCCT and is expected to disable the accounts of users from these countries on June 21.
Pressure From Government
Non-Cooperative Countries and Territories are countries the Financial Action Task Force on Money Laundering (FATF) have recognized as regions with insufficient policies and regulations to restrict money laundering and the utilization of various forms of money to finance illegal operations.
By banning users from countries actively investigated and observed by both the NCCT Initiative and FATF, Bithumb can eliminate any potential conflict with local financial authorities and other international regulators in regards to the usability of cryptocurrency in money laundering.
As an additional measure, the Bithumb development team will soon request foreign users to endure a mobile verification process to ensure users cannot deceive the platform by falsifying personal information and residential address.
“The Bithumb team will voluntarily impose strict policies and cooperate closely with local financial authorities to increase the transparency in the cryptocurrency market and protect investors. With progressive voluntary policies, Bithumb will improve the global standard of cryptocurrency exchanges,” a Bithumb spokesperson said.
Influence From Japanese Government
Earlier this month, Japan’s oldest and most influential newspaper Mainichi Shimbun reported that hundreds of millions of dollars had been laundered through three anonymous cryptocurrencies Zcash, Monero, and Dash by the Yakuza.
In Japan, the Yakuza, one of the most powerful organized crime syndicates in the world with 102,560 members, co-exists with the country’s government and police due to its complicated history originating from the 17th century.
The report of Mainichi triggered the Japanese government to restrict the usage of anonymous cryptocurrencies like Monero, Zcash, and Dash by requesting local cryptocurrency exchanges to de-list the digital assets.
“It should be seriously discussed as to whether any registered cryptocurrency exchange should be allowed to use such currencies. It’s a typical money laundering scheme. In a way, I’m not surprised. If you are going to do something illegal, then everyone knows to use the ‘three anonymous siblings,’” the official told Mainichi.
The FSA emphasized that other leading economies in the G20 have to collaborate to prevent the utilization of anonymous cryptocurrencies, especially by criminal groups and money launderers.
“It’s nearly impossible for Japan to handle the problem alone. Even if trade is restricted to only domestic transfers or monitoring is enhanced, it’s still not enough to counter money laundering. It would be best if all the group of 20 industrial and emerging nations and regions (G20) would take the same steps toward prevention,” the official added.
The ban on cryptocurrency trading in NCCT regions like Iran and Iraq demonstrated the intent and the long-term vision of Bithumb to remain compliant and bring transparency into the cryptocurrency market. It is possible that local exchanges start to consider the viability of listing anonymous cryptocurrencies in the public market.
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