Key Takeaways
- South Korea’s deputy prime minister has proposed amendments to the country’s Foreign Exchange Transactions Act.
- The proposed legislation would require crypto exchanges to register and report on cross-border transactions.
- Choi Sang-mok plans to implement the new monitoring system by the second half of 2025.
South Korea’s deputy prime minister, Choi Sang-mok, has sounded the alarm on the growing use of cryptocurrency for cross-border transactions, citing a lack of regulatory oversight.
The government is now proposing amendments to its Foreign Exchange Transactions Act to monitor and regulate these transactions and could impose new regulations.
Cross-Border Crypto Transactions Rise
According to a local daily, Choi highlighted that cross-border crypto transactions in South Korea have risen dramatically, from 191 billion won ($137 million) last year to 300 billion won ($215 million) this year. This surge is attributed to the increasing popularity of stablecoins.
Choi noted this growth has created a blind spot that criminals are exploiting to process illegal transactions and conceal criminal proceeds.
According to the Korea Customs Service, foreign exchange crime-related transactions have totaled 11 trillion won ($7.9 billion) over the past four years, with 81.3% of these illicit transactions linked to cryptocurrencies.
To address this issue, the government plans to include crypto-related transactions in its Foreign Exchange Transactions Act.
The proposed legislation would establish new legal obligations and reporting requirements for crypto exchanges dealing with cross-border crypto transactions.
An Amended Foreign Exchange Transactions Act
Under the new rules, crypto firms engaging in international transactions must register with the country’s financial regulator in advance.
These registered entities then must report on cross-border crypto transactions, including deposits and withdrawals from foreign crypto operators, clients, and personal wallets.
They would also be required to provide detailed information on pre- and post-transaction monitoring to the Bank of Korea every month.
The Ministry of Strategy and Finance aims to complete the Foreign Exchange Transactions Act amendment in the first half of next year, with the new monitoring system set to take effect in the second half of 2025.
“We will establish new definitions of virtual assets and virtual asset business operators in the Foreign Exchange Transactions Act, and with this separate definition, we will define virtual assets as a third type that is not included in foreign exchange, external payment means, or capital transactions,” said the deputy PM.
South Korea, considered a pro-crypto state, has a reputation for having clear crypto regulations.
However, its regulatory terrain is also notoriously complex.
The government’s decision to amend its foreign exchange regulations highlights the growing use of crypto for cross-border transactions and its desire to establish accountability in this unregulated domain.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
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