According to an October 25 report by Reuters, South Korean authorities are preparing to regulate cross-border digital asset transactions starting at the end of 2025.
The Ministry of Finance announced that new regulations will require registration and reporting for South Korean companies involved in cross-border cryptocurrency transactions.
Under this framework, South Korea-based companies that facilitate cross-border digital asset transactions will be required to pre-register with regulatory bodies and submit monthly transaction reports to the Bank of Korea. This requirement will allow South Korean authorities to closely monitor these transactions and prevent and address illegal activities related to cryptocurrencies.
The proposed framework also aims to further define virtual assets and virtual asset businesses in the country. This new classification distinguishes digital assets from traditional foreign exchange and cross-border payment systems, creating a separate regulatory category.
Vice Prime Minister and Minister of Planning and Finance Choi Sang-mok explained as follows.
“We will create new definitions of “virtual assets'' and “virtual asset operators'' under the Foreign Exchange Transactions Act. This separate definition places cryptoassets in a “third class” outside of foreign exchange, payment instruments, or capital transactions. ”
According to data from the Korean Customs Service, the amount of foreign currency that the country is believed to have been involved in crimes is nearly 11 trillion won (approximately $8 billion), of which 9 trillion won ($6.48 billion), or 81.3%. ) are related to cryptocurrencies. .
This development conveys the rationale behind the government's desire to protect the foreign exchange market from illegal cryptocurrency activity.
Pending the legislative process, the regulation is expected to go into effect in late 2025.
Over the past few years, South Korea has progressively worked towards building a comprehensive regulatory framework for the digital asset industry.
This has led to the introduction of several initiatives and regulations, such as the Virtual Asset User Protection Act, which mandates strict compliance and regular evaluation of the emerging industry. Additionally, many investors had their cryptocurrencies frozen at exchanges and were unable to access their funds.
