South Korea Mandates Reporting on International Stablecoin Transactions

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

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Last updated:

October 25, 2024 02:13 EDT

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South Korea’s government will set up a virtual asset transaction monitoring system to ensure sound transactions starting in the second half of 2025.

During his business trip to the G20 Finance Ministers’ Meeting, Deputy Prime Minister and Finance Minister Choi Sang-mok highlighted rising incidents of illegal foreign exchange activities, including corporate tax evasion and money laundering tied to drugs and gambling, involving digital assets, Business Korea reported Friday.

The government is responding to the rise in cross-border stablecoin transactions by requiring mandatory reporting.

As a result, the ministry reportedly said that businesses involved in cross-border virtual asset trade must register with authorities and submit monthly transaction reports to the Bank of Korea.

South Korea Sees Need for Virtual Asset Law as Cross-border Crypto Crimes Surge

Choi recognized the regulatory hurdles due to the absence of a foundational law on virtual assets. He said: “since a basic law on virtual assets has not yet been established, it is unclear whether stablecoins traded across borders should be viewed as a means of payment or as capital transactions.”

Still, he added “given the increasing suspicious cases of tax evasion and money laundering for drugs and gambling in recent cross-border transactions, we intend to amend the Foreign Exchange Transactions Act to provide a regulatory basis.”

Regulators have noted a strong link between foreign exchange crimes and cryptocurrencies, which led to this action.

Since 2020, the customs agency reports that 81.3% of the 11 trillion won ($7.97b) in foreign exchange crimes in South Korea involved virtual assets.

South Korea Among Top Crypto Hubs in 2024

In 2024, South Korea ranks among the top three preferred locations for crypto businesses. By requiring crypto companies to register with the FSC, the country ensures regulatory oversight and legitimacy for these operations.

The Virtual Asset User Protection Act has since led to the shutdown of several virtual asset exchanges this year. Consequently, customers will now be able to recover $12.8m in stranded investments.