South Korea Sets New Rules for Cross-Border Crypto Transactions

Jimmy Aki
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South Korea is implementing new regulations on cross-border cryptocurrency transactions to curb financial crimes and increase transparency in the digital assets space. Finance Minister Choi Sang-Mok revealed these measures during the recent G20 finance ministers’ meeting in Washington, D.C.

Reporting and Registration Requirements

According to a Korean news outlet, Choi emphasized the need for tighter control to tackle issues like tax evasion, money laundering, and foreign exchange crimes connected to crypto transactions.

He said,
“We will promote preemptive monitoring of virtual asset transactions that are used for tax evasion and currency manipulation across borders.”

Under the new rules, businesses handling international crypto transactions must pre-register with authorities and file monthly transaction reports with the Bank of Korea.

This proactive monitoring is designed to expose suspicious activities and minimize the opportunities for illegal financial dealings.

While South Korea revised its forex transactions rules in 2023, the country plans to amend the Foreign Exchange Transactions Act by 2025 to define “virtual assets” and “virtual asset business operators” as a separate category, distinct from traditional financial activities.

This will provide a legal basis for the new regulations, marking digital assets as a third, distinct classification within foreign exchange and financial transactions.

South Korea’s tax, customs, and financial authorities will collaborate to analyze reported data to facilitate regulatory enforcement.

This collaborative approach is intended to address a “blind spot” in existing oversight structures, as described by Minister Choi, where a lack of comprehensive monitoring has enabled some criminal actors to exploit regulatory gaps.

These updates are scheduled to take effect by the second half of 2025, giving stakeholders time to adapt.

Ongoing Efforts to Regulate Digital Assets

South Korea has already made strides in regulating digital assets.

In July, the country introduced the Virtual Asset Protection Act, which requires crypto exchanges and service providers to follow specific safety protocols. These include insuring against hacking incidents, maintaining separate storage for customer assets, and adhering to stringent token listing reviews.

In addition, severe penalties, including jail time and fines, were introduced for fraudulent activities.
South Korea has further tightened its requirements for banking partnerships with cryptocurrency exchanges, reflecting concerns about money laundering and fraud risks.

Banks in South Korea are now cautious about collaborating with crypto platforms, with some reluctant to bear the associated risks.

South Korea is not alone in enforcing stronger oversight of cryptocurrencies – the European Union, the United States, and other major economies are also moving in similar directions.

Last year, the Bank of Korea revealed a wholesale CBDC project to support tokenized deposits.
By continuing to regulate digital assets more closely, South Korea aims to prevent crime while establishing a safer, more transparent environment for digital asset transactions and investments.

As these rules become law in 2025, businesses and investors in South Korea will likely face new compliance obligations aimed at fostering a safer crypto market.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.