South Korea is unintentionally sending another warning to the users of centralized digital assets, showing that they can be tracked and controlled.
This time, local government authorities in the South Korean city of Iksan say they will clamp down hard on cases of illegal usage of a local stablecoin.
Newsis reported that the government in the North Jeolla Province city had announced a “crackdown to eradicate the illegal distribution of” the Iksan Dairom token. The blockchain-powered coin makes use of technology provided by the telecoms giant KT and its smartphone-based Good Pay ecosystem.
Similar KT-led projects are in use in other South Korean cities, such as Gumi, Gimpo, and Ulsan.
The tokens are a replacement for the paper-based gift certificates many South Korean cities used to issue in an attempt to promote local businesses that are in danger of being dwarfed by bigger nationwide or international brands.
According to the Iksan city website, in addition to large superstores run by conglomerates, a number of other businesses are also forbidden from accepting Dairom as a means of payment, namely: casinos, gambling, and lottery-related businesses, illegal forms of speculation, adult stores, massage parlors and pubs that provide “entertainment”-related services.
However, the city claims it has evidence that many smaller businesses are attempting to flout these regulations.
The city said that it was using blockchain technology to analyze Big Data from the local currency operating system to “monitor suspicious transactions such as fraudulent usages involving the token in “real-time financial transactions.”
Iksan added that it wanted to investigate cases whereby recipients of the tokens had obtained coins “without selling goods or providing services,” as well as cases where token payments exceeded the value of goods or services.
In some cases, merchants appear to have “repeatedly” purchased tokens “under someone else’s name and then exchanged them” for fiat KRW.
On-the-spot fines would be issued for minor offenses, the city added, adding that it would seek to prosecute major offenders and hit them with fines of up to USD 16,740.
A city spokesperson was quoted as stating,
“We will carry out a continuous crackdown on illegal distribution. We will prevent the illegal distribution of the Iksan Dairom and block illegal transactions at the source [to help] revitalize the local economy.”
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Learn more:
– Countries Should Prevent ‘Regulatory Arbitrage’ for Stablecoins – FSB
– Crypto in Chaos, but Blockchain-powered Pay and Stablecoins Thrive in S Korea
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– ‘Don’t Be Lulled’ as European Commission Mulls a Crypto KYC Trap
– Taproot, CoinSwap, Mercury Wallet, and the State of Bitcoin Privacy in 2021
– Why Fiat Currency Is More Confusing Than Crypto
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