South Korea Mandates Monthly Reports for Cross-Border Crypto Transactions

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As a seasoned researcher with a keen interest in the intersection of technology and finance, I find South Korea’s proactive approach to regulating cryptocurrencies quite intriguing. Having spent years studying economic policies across various countries, I can attest that this strategic move is not only prudent but also necessary for maintaining a stable financial ecosystem.

South Korea intends to tighten its cryptocurrency regulations to deal with the part that digital assets play in illegal foreign exchange activities. Minister of Economy and Finance, Choi Sang-mok, unveiled this strategy at a G20 meeting in Washington, emphasizing on cross-border crypto transactions. The government’s objective is to curb money laundering and unfair trading practices associated with digital currencies.

Starting from now, businesses handling cross-border deals using digital assets like stablecoins and cryptocurrencies are required to register with the relevant authorities in advance. As per Edaily, these businesses will also be expected to submit comprehensive reports detailing their transactions to the Bank of Korea on a monthly basis. This measure is designed to foster transparency within the digital asset transaction landscape, thereby making it more difficult for illicit activities to evade detection.

A group of South Korean regulatory agencies will oversee the gathered transaction data from various sectors such as taxes, customs, finance, and international finance. The aim of this joint venture is not just to trace illicit transactions but also to analyze the strategies and tactics used in foreign exchange fraud, thereby enhancing investigation processes.

Approximately 88% of foreign exchange offenses, as reported by the Korea Customs Service, are believed to involve cryptocurrencies, with an estimated value of about 1.65 trillion won or $1.2 billion.

South Korea Amends Act for Crypto Regulations

Minister Choi unveiled changes to the Foreign Exchange Transactions Act, aimed at aligning with proposed regulations. These changes will clarify terms such as “virtual assets” and “operators of virtual asset businesses”, distinguishing them from conventional foreign exchange dealings and other financial transactions. This legal distinction paves the way for new reporting and surveillance measures.

As an analyst, I’m sharing that our team at the Ministry of Economy and Finance is working diligently to complete necessary legal adjustments concerning cryptocurrencies by mid-2025. We anticipate that the reporting and monitoring systems will become operational in the second half of the year. This timeline reflects South Korea’s cautious stance on implementing crypto regulations, ensuring a smooth transition without causing significant market turbulence.

South Korea is actively developing a regulatory structure for digital assets. In July, they introduced investor-friendly regulations aimed at creating a safer cryptocurrency market, establishing guidelines against fraud and encouraging transparency. Continuing this momentum, the government intends to enact additional rules to manage the issuance, distribution, and disclosures of cryptocurrencies, enhancing the industry’s credibility.

South Korea Rethinks Crypto ETF Rules

The main financial regulator of South Korea is contemplating changes to the restrictions on local exchange-traded funds (ETFs) for cryptocurrencies and access for institutional investors to crypto exchanges. At present, most crypto activities are confined to individual traders. These potential modifications could broaden the market to institutional investors, attracting additional capital and fostering innovation within the cryptocurrency sector.

As for the Ministry of Economy and Finance, they haven’t provided any comments regarding the revised rules yet. However, the ongoing adjustments to the regulatory structure by the government show a careful approach that seeks to foster digital asset expansion while maintaining tight control to prevent abuse.

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2024-10-25 11:12