It seems that a movement to create a national cryptocurrency is gaining momentum
in Asia. FollowingChina [], theNorth Korean
[] their readiness to issue digital money and even indicated the availability of
all required resources ? both technical and human ? to implement this task.

Will the government of the most isolated country in the world go further than
its Asian neighbor, or is this just another attempt to scare theUnited States
[]? Among the reasons for issuing a North
Korean digital coin, experts name the circumvention of Westernsanctions
[], money laundering, speculation and
even the manufacturing of weapons of mass destruction.

All for cryptocurrencies?
In recent years, North Korea has become very interested in creating its own
cryptocurrency and has a sufficient level of competence to move forward with
this plan, as Alejandro Cao de Benos, a Special Delegate of the Committee for
Cultural Relations with Foreign Countries for the Democratic People?s Republic
of Korea,said
[] .

According to Cao de Benos, local experts are now studying various digital assets
in order to determine which of them the value of the future cryptocurrency
should be tied to. He also said that there were no plans for it to be backed by
the North Korean won and that it will be ?more like Bitcoin or other

But that?s not all. On Sept. 10, Cao de Benostweeted
[]that the North
Korean authorities have allowed citizens to own cryptocurrencies, and local
developers ?are designing crypto wallets and other related apps right now.?

It was also reported that other countries have helped North Korea in the
technical implementation of its initiative. In particular, Cao de Benosreferred
[] to several foreign companies that have already signed contracts with the DPRK
authorities for the development of blockchain systems for education, health care
and finance sectors.

Although he didn?t provide any names, the Korea Development Bank (KDB) had
pointed []to the
IT firm Joseon Expo a year earlier. The company allegedly created a platform for
the exchange of cryptocurrencies between interested parties on the order of the
North Korean authorities.

Despite bold statements by Cao de Benos, at the official level, the DPRK has so
[] to recognize or refute information about the intention of the country?s
administration to issue a national cryptocurrency.

Why North Korea may need its own cryptocurrency?
[] to Kayla Izenman, a research analyst at the Center for Financial Crime and
Security, the country has the necessary experience and resources to launch its
own cryptocurrency. As for the reasons behind the initiative, experts tend to
mostly come up with negative scenarios ? from bypassing the international
sanctions []and money laundering to
speculation and financing the weapons of mass destruction.

Bypassing U.S. sanctions?
According to many media outlets and Cao de Benos himself, Pyongyangneeds
[] digital assets to circumvent international sanctions. With its own
cryptocurrency, the DPRK may be able to break away from the international
financial system dependency. In an interview with Cointelegraph, Cao de Benos
noted two other advantages of cryptocurrencies ? transaction speed and
convenience ? as an additional argument in favor of the initiative.

[] that for Pyongyang, digital money is a new way to circumvent sanctions because
they are ?harder to trace, can be laundered many times, and are independent of
government regulation.? This means that the DPRK may have the opportunity to
trade with many countries around the world.

Sean King, vice president of the Park Strategies consultancy in New York,
[] the ?sanctions-proof? nature of cryptocurrencies, while Steven Kim, a researcher
at the Jeju Peace Institute in South Korea,said

> ?The cryptocurrency is the ideal form of money for North Korea because it can be
moved quickly and anonymously across borders and can be used to buy goods and
services online or converted to hard currency.?

While evading U.S. sanctions is the key factor behind the North Korea?s crypto
initiative, Jason Tucker-Feltham, founder of blockchain security firm London
Crypto Services, suggested to Cointelegraph that U.S. sanctions ?have led the
country to pursue alternative means of value transfer,? but this may not be the
only benefit of digital assets noticed by North Korea. He went on:

> ?Economies and central banks for which no US sanctions are in place (e.g. the
IMF) have expressed interest in developing their own crypto-assets, meaning that
the benefits in utilising DLT extends far beyond bypassing traditional payment

Moreover, as many analystsclaim
[], North Korea
may be backed by other countries ? such asIran
[]? which are already exploring national
digital assets to bypass the U.S. sanctions.

Cryptocurrencies allow for independence, which makes it almost impossible for
the U.S. financial regulators to trace or control such forms of money. It?s
therefore possible to transact cryptocurrencies on unregulatedcryptocurrency
exchanges []that don?t force users to
pass Anti-Money Laundering (AML [])
procedures. This makes it easier for hackers to freely and anonymously exchange
their digital assets.

Related:North Korea and Crypto: Is the Regime Responsible for Major Hacks?

Moreover, it?s the U.S. authorities that forced North Korea to use
cryptocurrencies, assuggested []by
Jose Pagliery, a CNN investigative reporter, who said, ?The UN and the
international community have locked them out of banks so whereas they used to
hack into the SWIFT system in banks.?

Some expertsclaim []North Korean
hackers need and allegedly already use more transparent cryptocurrencies than
Bitcoin (BTC []) to bypass the sanctions.
Izenman named Monero (XMR []) and ZCash (
ZEC []) in particular:

> ?Cryptocurrency especially if you?re using such coins as Monero or ZCash that
are privacy coins that aren?t as transparent as Bitcoin can be used and traded.
And they don?t need to go through the fiat system, they don?t need to touch the
dollar, they don?t need to touch a bank.?

Being a country with afairly low GDP
[] ($28 billion compared toSouth Korea?s
[]$1.54 trillion), North Korea has
long been looking for and applying various ways to raise foreign capital. And
cryptocurrencies are no exception.

It is being widelyreported
[] about how the DPRK uses several methods to obtain digital coins ? from mining
farms and masternodes to cryptojacking and participation in new, promising
projects. Specifically, North Koreabegan
[]mining Bitcoin in
May 2017, which coincided with the rise of Bitcoin. Steven Kim, a researcher at
the Jeju Peace Institute in South Korea,said
[] , ?If there is a way to exploit cryptocurrencies for financial gain, the DPRK
will figure it out and move aggressively to do so?

Many analysts noted cryptocurrency?s liquidity as a decisive factor in
Pyongyang?s interest in accumulating and creating digital assets,including
[]CNN?s Richard Quest:

> ?There?s also reason for them to hack into the mining of Bitcoins and steal
those Bitcoins as well because the price has been skyrocketing. [?] This is
quite liquid. They can cash those Bitcoins out on the market and get dollars.?

Recently, financial crimes and AML experts Lourdes Miranda and Ross Delston
[] a detailed explanation of how the DPRK can use cryptocurrency for money
laundering, which was later removed, however, from the website. In response to
the question whether North Korea could create its own blockchain for
manipulating crypto transactions domestically, they both answered, yes.

Nuclear weapon financing?
North Koreabegan
[] looking for ways to finance military programs back in the 1970s, when the
country was on the verge of default. As a result, a new structure was
established, aimed at getting foreign currency for the DPRK authorities.
According to areport []prepared in 2007
for the U.S. Congress, such activities helped North Korea raise $5 billion.

On Aug. 13, the United Nations Security Councilreleased
[] an expanded report, according to which the amount of funds stolen by North Korea
reached $2 billion. The authors of the report claimed that the government of Kim
Jong Un hacked the accounts of banks and cryptocurrency exchanges in 17
countries in order to finance weapons of mass destruction programs, claims which
the North Korean regime stronglydenied
[] . At the same time, cyber attacks were reportedly carried out under the
leadership of the country?s General Bureau of Intelligence.

The U.S. and South Korea believe that the DPRK?s online army consists of 20 to
30 elite cyber saboteurs specializing in cryptojacking. According togeneral
[] , the total number of cyber specialists may vary from 1,800 to 6,000 hackers.

The North Korean government itselfrejects
[] such allegations. Speaking with Cointelegraph Cao de Benos called such
statements ?ridiculous?. He added:

> ?The DPRK is already a nuclear power and we have enough to secure the safety of
the country. This is why we are in negotiations with the USA.?

Meanwhile the local media says that the country has nothing to do with attacks
on cryptocurrency exchanges and, furthermore, doesn?t support any hackers. In
particular, a representative of the DPRK National Coordinating Committee on
combating money laundering and financing of terrorismsaid
[] :

> ?Such a fabrication by the hostile forces is nothing but a sort of a nasty game
aimed at tarnishing the image of our Republic and finding justification for
sanctions and pressure campaign against the DPRK.?

Money laundering?
In their report, Miranda and Delston say that they are sure that Pyongyang is
developing its own cryptocurrency in order to cash out money:

> ?DPRK can create their own cryptocurrencies or use established ones like
Bitcoin. Having their own cryptocurrency would also facilitate their ability to
open online accounts under the guise of a non-adversarial nation using anonymous
communication to conceal the user?s locations and usage on the internet.?

The most difficult part in such a process, according to experts, is converting
cryptocurrencies into traditional fiat funds anonymously. And North Korea?s own
cryptocurrency system would most likely be able to solve this issue, as
suggested by Miranda and Delston:

> ?For example, DPRK could open an online wallet using a Russia-based service,
transfer its cryptocurrency into a Bulgaria-based wallet service and then
transfer it again into a Greece-based wallet service, all through anonymous
communication and using their own blockchain.?

In a conversation with Cointelegraph, Tucker-Feltham explained why North Korea
would likely build a private blockchain that wouldn?t be similar to Bitcoin:

> ?In view of it being a fully public blockchain, the Bitcoin network is poorly
suited for facilitating money laundering, as upon identifying the owner of one
public key all associated transactions can subsequently be traced. Furthermore,
there is a blossoming industry in chain-analytics that looks to track behaviours
on public blockchains. Such traits underpinning the Bitcoin blockchain may have
factored into the decision to develop an entirely new blockchain; were North
Korea to be developing a crypto-asset with the intention of its being
untraceable, it stands to reason that their blockchain will not be public.?

When asked by Cointelegraph to comment on this rumor, Cao de Benos said:

> ?As for money laundry that?s another stupidity. We don?t need to launder
anything because the DPRK is the most sanctioned country in the world and we are
not able to trade and use the traditional financial system.?

What are they doing at blockchain conferences?
Along with the active exploitation of cryptocurrencies, DPRK authorities are
conducting closed blockchain conferences and training courses. Specifically, in
2017, Pyongyang University of Science and Technologyheld
[] an accelerated cryptocurrency course for elite students, taught by Federico
Tenga, an Italian developer. Tenga himself declined to comment on the news about
the North Korean cryptocurrency, explaining that he had previously had trouble
after communicating with DPRK journalists.

In April of this year, North Korea held the nation?s first international
conference on blockchain technology and cryptocurrencies, bringing together
foreign experts from around the world. It has beenreported
[]that participants paid
3,300 euros for the program, which included a tour to the demilitarized zone
dividing North and South Korea. Nevertheless, there are no independent sources
that would confirm how successful the conference was ? as access was denied to
any outside observers.

The organizers themselvessaid []that the first event was
so successful that they decided to hold a second one in February 2020. The
conference is scheduled to last eight days and surpass the previous event in its
scope. Cao de Benos emphasized that the event will see a big number of Korean
government officials:

> ?The conference serves as a meeting opportunity but from there we will develop
long lasting collaboration and business with professionals and companies. The
participants in the Korean side are all working for the government in different
important institutions in finance, logistics, trade, etc.?

Meanwhile, participation is still prohibited for citizens of South Korea, Japan,
and Israel, while U.S. residents are allowed to attend the conference. Those
wishing to attend will need to send a CV, a passport scan and home address,
though it?s not clear where this all should be sent, as there are no official
email addresses or websites.

Independent and anonymousanalysts
[]in South Korea
believe that the main objective of the Pyongyang Blockchain and Cryptocurrency
Conference is to show that North Korea will develop and promote cryptocurrencies
if the U.S. does not begin to move forward in bilateral negotiations.

Some in the media havesaid
[] it is very likely that Russian experts will appear at the conference, which will
testify to the seriousness of the cryptocurrency activities of the DPRK as a

So, will a crypto be released?
Independent expertsargue
[] that Pyongyang has both the necessary resources and the technological experience
to successfully develop a state cryptocurrency. Martin D. Weiss, the founder of
Weiss Ratings, said in a conversation with Cointelegraph that there is every
chance it could happen:

?The question is whether it would be possible for adversarial or rogue nations
to use state-backed digital money to help establish an alternate system of
international transactions, thereby weakening the West?s ability to use
sanctions as leverage against them. The answer is yes, provided they can handle
large volumes.?

Weiss also noted that in the future, some countries could unite and create a
single payment system based on cryptocurrencies. Meanwhile, representatives of
the state-run Korean Development Bank expressed a completely different point of
view in theirreport
[], referring to
the country?s shortage of quality experts, computers and electricity.

Also,according [] to a senior fund manager at a U.S.-based investment bank in Seoul, the DPRK?s
closed internet network may interfere with the implementation of the
government?s plan, ?Because only limited Web access is available in the North,
Pyongyang can?t take advantage of cryptocurrencies in terms of unrestricted and
anonymous transactions.?

Whether a national cryptocurrency would help North Koreans get out of its
current economic troubles remains under question, considering other countries?
experience in this direction. For instance, attempts by Venezuela to save its
economy with the state-owned cryptocurrencyPetro
[] yet yielded any obvious success.

Pyongyang may also have to convince partner countries to use its new
cryptocurrency to circumvent Western sanctions. And this is not so easy to do
when companies around the world use the U.S. dollar,according
Annie Fixler, a sanctions and illicit finance expert at the Washington,
D.C.-based think tank Foundation for Defense of Democracies, who said:

> ?Washington?s use of sanctions now is reliant on the dollar?s role in the global
financial system ? U.S. sanctions have significant secondary effects because
non-US banks can?t risk losing access to dollar transactions by doing business
with sanctioned persons.?

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