South Korea Expands Crypto Travel Rule to Sub-$700 Transfers
Quick Answers
- The Financial Services Commission (FSC) of South Korea wants to use the Travel Rule on all crypto transactions, even those that are less than 1 million won (about $680).
- People used to break up big transfers into smaller ones to avoid identity checks. This change is meant to stop that.
- It might be possible to block high-risk foreign exchanges, and there will be stricter rules for the finances and ownership of local platforms.
- After changes to the law, the new framework should be in place by the first half of 2026.
In the world of cryptocurrencies, South Korea is stepping up its game. Regulators want to make it harder for criminals to use digital assets for things like tax evasion and money laundering.
The Financial Action Task Force (FATF) set the Travel Rule as a global standard. It makes crypto exchanges gather and share information about who is sending and receiving money. Think of it as a digital ID check for sending money.
This rule only applies to deals worth more than 1 million won in South Korea right now. That left a big hole: criminals could break up large amounts of money into small amounts to avoid detection. There won’t be any more of that soon.
During a briefing for the National Assembly, FSC Chairman Lee Bok-hyun announced the plan. He said, “We will crack down on crypto money laundering by making the Travel Rule apply to transactions of less than 1 million won.”
Exchanges now have to collect full information about both the sender and the receiver, even for small transfers. This is true for virtual asset service providers (VASPs) in the country.
The government will also block “high-risk” offshore platforms that don’t follow the rules in their own country. South Koreans won’t be able to use them if they’re sketchy.
Local exchanges also have to go through more checks. Regulators will take a closer look at their finances, reserves, and internal controls. And get this: people who have been convicted of drug crimes or tax evasion in the past can’t become big shareholders in these companies anymore.
The Financial Intelligence Unit (FIU) can now freeze accounts that look suspicious before money disappears. That’s a proactive step to stop money from going where it shouldn’t.
