South Korea Mandates Reporting for Cross-Border Crypto Transactions to Combat Financial Crime
South Korea is set to implement stringent regulations on cross-border cryptocurrency transactions, as the country grapples with a surge in digital asset-related financial crimes. Finance Minister Choi Sang-mok announced the new regulatory framework during a G20 meeting in Washington, marking a significant shift in the nation’s approach to cryptocurrency oversight.
The new mandate, scheduled to take effect in the second half of 2025, will require businesses handling cross-border cryptocurrency transactions to pre-register with authorities and submit monthly reports to the Bank of Korea. This move comes in response to alarming statistics from the Korea Customs Service, which revealed that cryptocurrency-related activities accounted for 88% of foreign exchange crimes, amounting to approximately 1.65 trillion won ($1.2 billion).
“We will promote preemptive monitoring of virtual asset transactions that are used for tax evasion and currency manipulation across borders,” Minister Choi stated, addressing what he described as a “blind spot” in the country’s current regulatory framework.
To establish legal grounds for the new requirements, the ministry plans to amend the Foreign Exchange Transactions Act, introducing new definitions for “virtual assets” and “virtual asset business operators” as a distinct category separate from traditional foreign exchange and payment systems. The reported transaction data will be monitored by multiple regulatory bodies, including tax, customs, and financial authorities, to track illegal activities and conduct research.
This initiative builds upon South Korea’s existing efforts to regulate its digital asset sector. The country implemented its first set of investor protection rules in July 2024 and is currently developing additional standards for crypto issuance, distribution, and disclosures. Furthermore, South Korea’s top financial watchdog is reviewing its stance on local spot cryptocurrency exchange-traded funds and institutional accounts on crypto exchanges, potentially signaling a shift from its predominantly retail-focused market.
The regulatory timeline includes finalizing legal revisions by the first half of 2025, with the comprehensive reporting and monitoring system launching in the latter half of the year. This systematic approach reflects South Korea’s commitment to maintaining financial stability while adapting to the evolving landscape of digital assets.
Photo by Daniel Bernard on Unsplash
