Regulatory insights have forced the fifth largest crypto exchange in the world to ban trading in 11 countries. Bithumb announced on Sunday that they will be banning the use of their platform. The extreme measures taken by the company could make some changes to its volume. Users from Sri Lanka, Iran, Serbia, Iraq, Vanuatu, Syria, Yemen, Tunisia, Trinidad and Tobago and Ethiopia will no longer be able to use the platform.
The exchange is following the steps taken by its peers to help make the cryptocurrency space a safe place. It is following the lead of Bitfinex and Poloniex to ensure that anti-money laundering (AML) laws are followed in all the countries where the exchange is operative. All the countries listed in the announcement have been categorized as Non-Cooperative Countries or Territories or NCCT by the Financial Action Task Force (FATF). This international organization has been created to combat money laundering issues.
The countries in the NCCT list are believed to have insufficient anti money laundering laws in place which could lead to weaker regulatory oversight. Consequently, such countries could easily become prone to several heists and thefts or other illegal activities like terrorist funding. The South Korean exchange has been under severe governmental pressure to ensure that its users are KYC verified and all the territories it operates in have strong AML laws.
Local law enforcement bodies even raided the offices of the exchange on tax evasion charges. No subsequent cases were filed but Bithumb wants to be careful about the future. Later, local news outlets reported that the authorities were simply looking for KYC/AML records of the users of this unregulated exchange. It wasn’t the only exchange that was under the government’s scanner. Upbit, which was the largest cryptocurrency exchange at the time, was also investigated extensively on fraud charges. However, no formal charges were pressed against them and the case ended in a dud soon after.
However, in April, four executives from two South Korean crypto exchanges, including their fifth largest platform Coinnest were arrested in April on charges of fraud and embezzlement. The country’s market was one of the biggest in terms of volume and infamous for trading at a premium, which could go as high as 30% of the global prices. The government hasn’t called trading in these currencies illegal, but they want to keep all their records intact.
Many governments across the world are now tightening regulatory oversight on the crypto market, levying taxes, and making KYC and AML compulsory for all operative exchanges. The US Department of Justice is currently investigating a case of cryptocurrency price manipulation and there is a chance that taxes will also be levied on the transactions. Indian authorities are also reportedly levying an 18 percent goods and services tax on all crypto transactions from the past 1 year retroactively. Their central bank has already ordered all public and private sector banks to curb all their relationships with crypto exchanges.
Though frauds have become quite common, the governments now want to shift their focus on regulating currencies instead of banning them which is a good idea.
