South Korea plans to increase oversight of cross-border transactions involving crypto in a bid to combat tax evasion and “foreign exchange” crimes, the country’s finance minister, Choi Sang-Mok, reportedly said at a G20 meeting in Washington.
Choi said South Korea will introduce a reporting mandate for any business that handles “cross border transactions” involving crypto assets, according to an Oct. 24 report from local Korean news outlet Edaily.
“We will promote preemptive monitoring of virtual asset transactions that are used for tax evasion and currency manipulation across borders,” said Choi.
South Korean Finance Minister Choi Sang-Mok at a G20 meeting in Washington. Source: South Korea Ministry of Strategy and Finance
Under the new rules, any business that handles cross-border crypto transfers will be required to pre-register with the relevant authorities and report all details to the Bank of Korea on a monthly basis.
Choi said cross-border crypto transactions were currently a “blind spot” for the country’s tax and customs services. Criminals may exploit the case-by-case nature of enforcement to conceal illicit proceeds and conduct illegal transactions.
According to the Korea Customs Service, 81% of foreign exchange crimes — about $1.2 billion since 2020 — have been related to digital assets.
Still, before new rules can be implemented, the government must establish a proper legal basis for them.
“We will establish new definitions of ‘virtual assets’ and ‘virtual asset business operators’ in the Foreign Exchange Transactions Act, and with this separate definition, we will define virtual assets as a ‘third type’ that is not included in foreign exchange, external payment means, or capital transactions,” Choi said.
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The finance minister said he expects the legal revisions to be finished by the first half of 2025, with the new reporting mandates to be implemented by Q2.
South Korea has recently introduced a swathe of new regulations to protect crypto investors.
On July 19, its Virtual Asset Protection Act came into effect, compelling virtual asset service providers (VASPs) in the country to maintain stricter rules to protect user assets.
The laws require VASPs to take out insurance against hacks and malicious attacks. They also mandate that providers keep user assets separate from exchange tokens while keeping customer deposits in banks and regularly reviewing token listings on exchanges.
South Korea will also impose severe punishments on perpetrators of crypto crime, including jail sentences and fines of three to five times the amount of illegally acquired profits.
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