South Korea has passed a new law aimed at strengthening oversight of crypto assets moving in and out of the country, adding pressure on digital asset firms as regulators push for stricter controls across the sector.
According to local media reports, the country’s National Assembly approved an amendment to the Foreign Exchange Transactions Act during a plenary session held on Friday. The update will require businesses handling overseas crypto transfers to register with the Minister of Economy and Finance before operating.
The new amendment also introduces a legal definition for “virtual asset transfer businesses.” The category covers companies involved in cross-border crypto transfers through buying, selling, or exchanging digital assets. Crypto exchanges and digital asset custody firms are included under the rule.
Authorities are expected to use the updated framework to track international crypto flows more closely and strengthen monitoring of transactions linked to foreign markets.
South Korea expands crypto oversight
The latest move adds to a series of crypto regulations introduced by South Korean authorities in recent months.
Earlier, the country’s Financial Services Commission announced plans to widen Travel Rule requirements to include all crypto transfers. Under the current system, exchanges only need to collect sender and receiver information for transactions above 1 million won, roughly $681.
The proposed expansion would remove that threshold and apply identity verification rules to all transfers, regardless of size.
Some local crypto firms have reportedly pushed back against the change, warning it could slow transaction speeds and create difficulties for traders operating in volatile market conditions.
Crypto tax still scheduled for 2027
South Korea is also preparing to roll out its long-delayed crypto tax framework. Tax authorities recently confirmed that a 22% tax on crypto gains above 2.5 million won, about $1,703, is still scheduled to take effect in January 2027.
The policy has faced repeated delays over concerns about unclear regulations and the country’s readiness to properly enforce crypto taxation. However, officials now appear determined to move forward with stricter oversight and reporting rules for the digital asset sector.
Why South Korea is tightening crypto rules?
South Korea is taking action now because cryptocurrency has become a huge part of its economy. Trading volumes often compete with those of the traditional stock market. The government aims to prevent people from illegally moving money out of the country or hiding wealth abroad to avoid the upcoming 22% crypto tax. By establishing these rules today, they are essentially closing a “back door” that allows money to cross borders without the same oversight as banks.
For exchanges like Upbit and Bithumb, this means much more paperwork and higher costs to develop tracking systems that communicate directly with the government. This is a notable burden that may force smaller platforms to shut down, leaving only the largest players.
Meanwhile, DeFi and private wallets are under scrutiny. The government wants to ensure every transfer is linked to a real name, making it much harder and less private to use decentralized apps or send crypto to unverified accounts.
For the average trader, the most significant change will be the loss of speed and privacy. Withdrawals can be expected to take longer as exchanges manually check where your money is going to comply with the “Travel Rule.” Every international transaction you make will now be visible to tax authorities, meaning the days of moving assets across borders without detection are essentially over. While this makes the market safer legally, it adds layers of friction and oversight that South Korean traders have not faced before.
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