South Korean financial regulators have stepped back from a proposed rule that would have required cryptocurrency exchanges to automatically report large transfers involving overseas platforms and private wallets.
The proposal would have classified any crypto transfer above 10 million won ($7,300) as a suspicious transaction, forcing exchanges to report it to the Financial Intelligence Unit (FIU) regardless of whether there were signs of illegal activity. After discussions with industry participants, authorities have now decided to allow exchanges to make their own anti-money laundering (AML) risk assessments instead of relying on a fixed transaction threshold.
🚨 South Korea to End Mandatory Reporting for Certain Crypto Transfers
South Korea is set to remove mandatory reporting requirements for certain cross-border cryptocurrency transfers exceeding 10 million won. The move is aimed at reducing administrative burdens while supporting…
— Toscale.io (@toscale_io) June 5, 2026
An FIU official said firms should focus on the actual risk level of transactions rather than mechanically filing reports based only on transfer size.
Industry opposition influences policy change
The proposed rule faced strong resistance from South Korea’s crypto sector, particularly from the Digital Asset Exchange Alliance (DAXA), which represents the country’s five largest cryptocurrency exchanges.
DAXA argued that suspicious transaction reports should be based on genuine indicators of risk and not on transaction amounts alone. Industry estimates suggested the measure could have increased annual suspicious transaction reports from about 63,000 to more than 5.4 million.
Exchanges warned that such a dramatic rise in filings would overwhelm compliance teams and create a flood of routine reports, making it more difficult for regulators to identify genuinely suspicious activity. Industry participants also argued that the proposal would effectively shift reporting responsibilities from regulators to exchanges.
Travel rule expansion is still moving forward
Although regulators appear ready to abandon mandatory reporting tied to the 10 million won threshold, other crypto compliance measures remain on track.
Authorities are continuing plans to remove the current 1 million won threshold for travel rule requirements. Under existing regulations, exchanges only collect and share sender and receiver information for transfers above that amount. The amendment would extend those requirements to all transfers, regardless of value.
If approved, users will face identity verification checks for every cross-border crypto transfer, including smaller transactions.
Regulators ease other compliance requirements
South Korean authorities have also softened several other proposed compliance measures following industry feedback.
Enhanced customer verification will now be required only for transactions that exchanges determine carry particularly high risks, rather than for all high-risk suspicious transactions. Regulators have also postponed a proposed debt ratio limit of 200% for virtual asset businesses by one year to give smaller firms additional time to adjust.
In addition, exchanges will be allowed to use overseas cloud services for AML operations, except when handling sensitive identification or personal credit information. Meanwhile, South Korean lawmakers are set to review a proposal to scrap the country’s planned crypto tax after a public petition gathered enough signatures to move forward in the National Assembly.
The Financial Services Commission said no final decision has been made on the 10 million won reporting rule. The FIU is still reviewing alternative options before the amendment is finalized. If the revised framework clears remaining regulatory reviews, the updated rules are expected to take effect on August 20.
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