Cryptocurrency Regulation in North Korea Prior to 2024: A Landscape of Uncertainty and Controversy

The legislative landscape for cryptocurrencies in North Korea before 2024 is marked by a lack of clear regulations or legislation specifically governing these digital assets. This absence of formal legal status makes the environment for cryptocurrency in North Korea highly controversial and uncertain​​.

One significant aspect of North Korea’s interaction with cryptocurrencies has been its strategy to evade economic sanctions. The country has been associated with various activities in the digital currency sphere, most notably, the theft of digital currencies. This controversial involvement in the cryptocurrency sector is not only a matter of evasion but also a polemic issue in the international community​​.

North Korea’s involvement in cryptocurrency-related cybercrime has been a notable concern. In 2017, the country was implicated in the hacking of the Bithumb cryptocurrency exchange, resulting in a loss of around $7 million in digital assets. Additionally, North Korea was blamed for the hacking of the YouBit exchange, which consequently went bankrupt. Notably, the WannaCry Bitcoin ransomware attack in the same year, which netted at least $120,000 in Bitcoin, was also linked to North Korea. Furthermore, North Korean hackers were primary suspects in a major heist from the Coincheck exchange in Japan, involving the theft of $526 million worth of the NEM cryptocurrency. These activities have been connected to Lazarus, a state-sponsored North Korean hacking group​​.

Research by the Royal United Services Institute in London at RUSI’s Centre for Financial Crime and Security Studies reveals that North Korea has used cryptocurrencies as a significant revenue stream and a tool for money laundering. The regime reportedly garnered up to $2 billion through such cyberattacks. Additionally, there is evidence that North Korea has been actively mining cryptocurrencies, possibly for use in illicit transactions or as a future reserve​​.

In summary, the landscape for cryptocurrency regulation in North Korea prior to 2024 was characterized by a notable absence of specific legal frameworks. The country’s engagement with digital currencies has been primarily defined by its controversial activities in evasion of sanctions, cybercrime, and alleged use of cryptocurrencies for illicit financial gains. This scenario presents a complex and risky environment for cryptocurrency operations within or involving North Korea.