Last month the South Korean parliament passed a bill, reforming its current policy in order to comply with international regulatory standards. The Value Network Domain Name System (VDNS), created by Bithumb, is a system for identification and authentication, which helps companies adhere to the global norms and specifications, the company announced in a press release.
The South Korean authorities are aiming to establish compliance with the guidelines of the International Anti-Money Laundering Organization. In order to do so, the Act on Reporting and Use of Specific Financial Information has been amended by the Amendment Subcommittee on Parliamentary Affairs from the National Assembly, the parliamentary body of South Korea.
The revision is being introduced along with the Special Financial Transaction Information Act, which is supported by the Korean Blockchain Association.
These actions formally integrate the cryptocurrency sector within the conventional local economy. Most significantly, virtual bank accounts are now required to be registered under a real name.
The online exchanges and their agents are put under the direct supervision of the Financial Commission’s Financial Information Analysis Institute (FIU). Violators of the new rules can result in 5 years in prison and up to 50 million Won ($42,000) fine.
South Korea accounts for almost 20% of the cryptocurrency transactions worldwide and the industry was heavily affected when the country’s government via its Financial Services Commission took actions against anonymous virtual accounts in January 2018, stating that such accounts can be used for money laundering.
In the aftermath, only a few of the cryptocurrency exchanges existing at the time remained operational, one of which is Bithumb. Since then Bithumb developed its Value Network Domain Name System (VDNS) with the goal to streamline the adoption of cryptocurrency among business organizations and the general public, by providing a reliable identity authentication system.
With this system, every on-chain address receives a designated top-level domain with a domain name of up to 32 characters. The end-users are provided with the ability to issue non-public proofs on the blockchain and to validate such proofs against the issuer’s domain name associated with their addresses, thus achieving the need for transactional privacy as per FATF requirements.
Bithumb Chain is created with the intention to be an all-round solution aimed at solving a diverse range of on-ramping issues in the cryptocurrency field while connecting a variety of off-chain and on-chain services, products, and infrastructure. Bithumb Global is currently one of the most prominent South Korean cryptocurrency exchanges with a global reach and impact.