Key Takeaways
- The requirements are expected to take effect by the second quarter of 2025.
- Finance Minister Choi Sang-Mok announced that businesses handling international crypto transfers will be required to register with South Korean authorities
South Korea plans to tighten control over cross-border cryptocurrency transactions in response to concerns about tax evasion and illegal financial practices tied to digital assets.
During a recent G20 meeting in Washington, Finance Minister Choi Sang-Mok announced that businesses handling international crypto transfers will be required to register with South Korean authorities and report monthly transaction details to the Bank of Korea. As per local media reports, the requirements are expected to take effect by the second quarter of 2025.
The decision marks a significant step toward closing what officials have described as a “blind spot” in tax and customs enforcement surrounding digital currencies.
The Korea Customs Service recently reported that 81% of foreign exchange crimes since 2020—estimated at roughly $1.2 billion—are associated with cryptocurrency. This has fueled concerns over a lack of oversight and led to South Korea’s push for a more robust regulatory framework.
To implement these changes, the South Korean government is revising its Foreign Exchange Transactions Act to incorporate specific definitions for “virtual assets” and “virtual asset business operators.”
By establishing clear legal definitions, authorities aim to distinguish digital assets from traditional forms of foreign exchange, payments, and capital transactions, which should simplify monitoring and enforcement. “We will establish new definitions of ‘virtual assets’ and ‘virtual asset business operators’ in the Foreign Exchange Transactions Act, defining virtual assets as a ‘third type’ outside of traditional categories,” said Minister Choi.
In addition to strengthening tax enforcement, these upcoming regulations are part of South Korea’s broader efforts to protect cryptocurrency investors and stabilize the digital asset sector.
Earlier this year, on July 19, the Virtual Asset Protection Act came into effect, requiring virtual asset service providers (VASPs) to meet stricter security, insurance, and transparency standards. This law also introduced penalties, including heavy fines and jail time, for crypto-related fraud. It was designed to safeguard users’ assets and improve investor confidence in the sector.
Under the new framework, companies facilitating cross-border digital asset transactions will need to pre-register with relevant South Korean regulatory bodies, ensuring authorities have full visibility into transaction flows.
“We will promote preemptive monitoring of virtual asset transactions that are used for tax evasion and currency manipulation across borders,” Choi emphasized, reflecting the government’s commitment to preventing financial crimes in the rapidly evolving crypto space.
South Korea’s increased focus on regulating digital currencies aligns with trends across other nations and the forthcoming European Union’s Markets in Crypto-Assets Regulation (MiCA), set to take effect in 2025.
