South Korea to regulate cross-border crypto trades by 2025 News โธ South Korea โธ Regulation
South Korea to regulate cross-border crypto trades by 2025
South Korean authorities said 81% of forex crimes are linked to crypto.
2 min read
Updated: Oct. 25, 2024 at 3:29 pm UTC
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South Korean authorities are preparing to regulate cross-border digital asset transactions beginning in late 2025, according to an Oct. 25 report by Reuters.
The Ministry of Finance announced that the new regulations will require registration and reporting for businesses in Korea involved in cross-border crypto trades.
Under this framework, Korea-based companies facilitating digital asset transactions across borders must pre-register with regulatory bodies and submit monthly transaction reports to the Bank of Korea. This requirement enables South Korean authorities to monitor these transactions closely to prevent and address crypto-related illegal activities.
The proposed framework also aims to further define the country’s virtual assets and virtual asset businesses. This new classification will distinguish digital assets from traditional foreign exchange and cross-border payment systems, creating a separate regulatory category.
Deputy Prime Minister and Minister of Strategy and Finance Choi Sang-mok reportedly explained:
“We will establish new definitions of โvirtual assetsโ and โvirtual asset operatorsโ in the Foreign Exchange Transactions Act. With this separate definition, virtual assets will be classified as a โthird type,โ outside the scope of foreign exchange, payment instruments, or capital transactions.”
Data from the Korea Customs Service shows that the country has recorded nearly 11 trillion won (around $8 billion) in foreign exchange volume it has attributed to crime, with 81.3%, or 9 trillion (equivalent to $6.48 billion) of these cases linked to crypto.
This development informs the rationale behind the government’s desire to protect its foreign exchange market from illicit crypto activities.
Pending the legislative process, the regulation is expected to go into effect in the second half of 2025.
Over the past years, South Korea has been progressively working toward a comprehensive regulatory framework for its digital asset industry.
This has led to the implementation of several initiatives and regulations, including the Virtual Asset User Protection Act, which mandates stringent compliance and regular assessments of the emerging industry. It has also led to many investors having crypto frozen on exchanges with no access to their funds.
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