South Korea has passed legislation that brings offshore cryptocurrency transfers immediately under its foreign exchange regulations. Officials said the reform aims to reduce money laundering, tax evasion, and undeclared capital flows related to digital assets.
Lawmakers added a new category, a “virtual asset transfer business,” to the Foreign Exchange Transactions Act. This mark will now apply to any company that transfers cryptocurrency between South Korea and other nations. This covers wallet providers, custodians, centralized exchanges, and other businesses that transfer tokens or coins between countries.
To operate lawfully after the law takes effect, these companies need to register with the Minister of Finance and Economy. Registration requires in‑depth reporting on transaction volumes and international counterparties, going beyond a straightforward sign‑up. Authorities will be able to monitor cross-border transfers of virtual assets like bitcoin, ether, and stablecoins in real time.
Officials said the idea is to use cryptocurrencies within the same foreign-exchange infrastructure that already processes international payments and bank transfers. They hope this will help them to meet international anti-money laundering standards and strengthen financial stability.Â
Direct Oversight and Stronger Penalties
Under the amended law, the finance ministry and foreign‑exchange regulators will, for the first time, directly oversee overseas crypto transfers. They can track which firms move funds abroad, how much they send, and where the money goes.
Penalties for illegal foreign‑exchange activity involving crypto are also getting tougher. Violations can now carry a sentence of up to 1 year in prison or fines of up to 100 million won, about 72,500 dollars. The law also clearly allows the government to cancel the registration of operators who break the rules or operate without approval.
South Korea is one of the world’s busiest crypto markets, with daily trading on local platforms often exceeding $ 10 billion. Regulators say a market of that size needs strong oversight of cross‑border flows, not just domestic trading.
The new registration law is part of a wider tightening of crypto compliance in South Korea. Regulators are already moving to extend the Travel Rule so that identity checks apply to all crypto transfers, including those under 1 million won, or about 680 dollars. The change aims to close a loophole that lets users split transfers into smaller amounts to avoid KYC.
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