South Korea to Regulate Cross-Border Crypto Trades Starting 2025

26-10-2024 By: Deep Upadhyay
South Korea to Regul

South Korea's Upcoming Regulations on Cross-Border Crypto Transactions

South Korea has announced plans to impose regulations on cross-border cryptocurrency transactions by the latter half of 2025. The initiative, led by the Ministry of Finance, aims to address concerns around financial crimes linked to digital assets, which have seen an alarming rise in recent years.

  • Implementation Timeline: The new regulations are slated to begin in the second half of 2025, following the completion of required legislative procedures.

  • Registration and Reporting: Companies in South Korea engaged in cross-border virtual asset transactions will be required to:

    • Register with regulatory bodies.

    • Submit Monthly Reports of their transactions to the Bank of Korea.

  • Regulation Scope: These measures will impact all entities facilitating digital asset transactions across borders, allowing authorities to better monitor the sector and mitigate risks associated with illegal financial activities.

Financial Crime Concerns

South Korea’s move to regulate crypto transactions comes in response to rising foreign exchange-related crimes. According to data from the Korea Customs Service:

  • The nation has recorded approximately 11 trillion won ($8 billion) in foreign exchange volume linked to crime since 2020.

  • Around 81.3% of these cases, or approximately 9 trillion won ($6.48 billion), involved virtual assets, highlighting a critical need for oversight.

The focus on monitoring crypto-related financial crimes aligns with South Korea’s broader effort to protect its economy and ensure security in its financial markets.

Separate Classification for Virtual Assets

Deputy Prime Minister and Minister of Strategy and Finance, Choi Sang-mok, confirmed that the new regulatory framework will define digital assets separately from traditional foreign exchange. The updated Foreign Exchange Transactions Act will recognize virtual assets as a distinct category outside the scope of regular forex, payments, or capital transactions.

This separate classification reflects the government's commitment to developing a comprehensive framework that distinguishes crypto assets from conventional financial tools.

Broader Regulatory Context

South Korea has been working on various regulatory measures for digital assets, including the Virtual Asset User Protection Act, which imposes compliance requirements for the industry. These efforts underscore South Korea’s cautious but progressive approach to managing the risks and opportunities within the growing digital asset sector.

By introducing these regulations, South Korea aims to create a safer environment for its citizens while addressing the risks posed by cross-border cryptocurrency transactions.

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