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South Korea is set to implement tighter oversight on cross-border cryptocurrency transactions to prevent tax evasion and other financial crimes, Finance Minister Choi Sang-Mok announced at the G20 summit in Washington.
According to an October 24 report from Edaily, the new policies will require all businesses handling cross-border crypto transfers to pre-register with authorities and submit transaction details monthly to the Bank of Korea. Choi emphasized that these measures are part of a broader plan to monitor crypto assets used in tax evasion and cross-border currency manipulation schemes.
New Rules Aim to Address Regulatory Blind Spots
Currently, cross-border crypto transactions are largely unregulated in South Korea, leaving a āblind spotā that criminals may exploit for illicit activities. As a result, the Korean Customs Service found that a staggering 81% of foreign exchange crimesāaround $1.2 billion since 2020āties to digital asset transactions. However, the government first needs to establish a legal framework to support these initiatives.
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Choi confirmed that the administration is working to redefine terms like āvirtual assetsā and āvirtual asset business operatorsā within the Foreign Exchange Transactions Act, categorizing virtual assets separately from foreign exchange or traditional payment methods. The legal groundwork is expected to be laid by mid-2025, with the new mandates anticipated for rollout in the second quarter.
Reforms to Protect Investors in South Korea
This move aligns with South Koreaās recent series of crypto regulations designed to protect investors and prevent fraud. Since July, the countryās Virtual Asset Protection Act has enforced stricter safeguards on local Virtual Asset Service Providers (VASPs).
These regulations mandate that VASPs keep user assets separate from company tokens, take out insurance against cyber threats, and deposit client funds with licensed banks. They also require providers to regularly review the tokens listed on their platforms, thereby promoting a more transparent and secure trading environment.
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South Korea has also introduced strict penalties for crypto-related scammers. Individuals convicted of crypto-related offenses now face significant finesāup to five times the illegal profitsāas well as potential jail time. This is part of South Koreaās larger regulatory push to secure its growing crypto ecosystem and deter malicious actors.
With these recent measures, South Korea is positioning itself as a leader in crypto regulation in Asia, tackling the vulnerabilities in crypto trading infrastructure while securing investor interests.
