New crypto regulations in South Korea will require businesses engaged in cross-border virtual asset trade to register with authorities in advance and submit monthly transaction reports to the Bank of Korea.
According to local media reports, the Ministry of Economy and Finance of South Korea announced its plans to regulate crypto-related cross-border transactions on Friday (Oct 25).
The new regulations that are supposed to come into effect in the second half of 2025 will require registration and reporting when it comes to transactions facilitated by virtual assets such as cryptocurrency. Businesses dealing with such cross-border trade will have a right to do so following the preliminary authorisation from the local legal bodies. They will also have to submit monthly reports on their crypto-linked activities.
The new regulation aims to fight financial crime facilitated by the anonymous nature of crypto transactions It is estimated that there have been a total of 11 trillion won (US$7.97 billion) worth of foreign exchange-related crimes in South Korea since 2020. The vast majority of them (over 80%) were conducted with the help of crypto transactions and other virtual assets.
Eastern Asia is the sixth largest cryptocurrency economy in the world this year, accounting for 8.9% of global crypto value received between July 2023 and June 2024. South Korea and Hong Kong stand out as the most crypto-active countries in the region, with institutions driving increased adoption.
In South Korea, cryptocurrencies are not considered legal tender, and while exchanges operate legally, they are subject to stringent regulations that came into effect this July. For example, local crypto exchanges are now required to keep at least 80% of user deposits safe in a cold wallet separate from their own funds.
However, the taxation of cryptocurrencies in South Korea remains ambiguous, as these transactions are classified neither as cash nor financial assets, resulting in them currently being tax-exempt.
