South Korea's Cryptocurrency Regulation Plans

South Korea plans to ramp up regulation over cross-border transactions using cryptocurrencies to curb foreign exchange crime, as announced by Minister of Economy and Finance Choi Sang-mok during a G20 meeting in Washington.

Registration Requirement

Choi stated that businesses engaged in "cross-border transactions" of stablecoins and cryptocurrencies must pre-register with authorities and report transaction details to the Bank of Korea monthly, according to Edaily.

Monitoring Transactions

South Korea’s tax, customs, and financial regulatory bodies will monitor the reported transaction data to track illegal activities and support research efforts.

Statistics on Foreign Exchange Crimes

The Korea Customs Service reports that approximately 88% of foreign exchange crimes valued at 1.65 trillion won ($1.2 billion) involved cryptocurrencies, encompassing illegal arbitrage and money laundering operations.

Legal Revisions

To support these regulations, Choi indicated that the ministry will amend the Foreign Exchange Transactions Act to define "virtual assets" and "virtual asset business operators" distinctly from conventional foreign exchange and capital transactions. The legal revisions are expected to be finalized by the first half of 2025, with the new reporting system launching in the latter half of the year.

Ongoing Regulatory Efforts

South Korea is establishing a comprehensive regulatory framework for its digital asset sector. New rules focused on investor protection were implemented in July. The country is also set to introduce additional regulations about crypto issuance, distribution, and disclosure.

The top financial watchdog is reevaluating its ban on local spot cryptocurrency exchange-traded funds and institutional accounts on crypto exchanges to broaden its retail-centric crypto sector.