South Korean government will most likely introduce new regulations to monitor cross-border crypto transactions. According to local media reports, to combat tax evasion and illicit foreign exchange activities, South Korea is increasing its oversight of cryptocurrency transactions across international borders.
During the G20 summit in Washington, a representative from the nation said that South Korea would mandate that companies who deal in international cryptocurrency transfers register and submit a monthly report to the Bank of Korea detailing all transactions.
Since cross-border cryptocurrency transactions have allegedly turned into a “blind spot” for tax and customs enforcement, this new requirement attempts to stop illicit financial activities.
How Will Cross-Border Crypto Transaction Watch Help SK?
Once the government creates a legal framework under the Foreign Exchange Transactions Act, companies managing cross-border cryptocurrency transactions will have to pre-register with authorities by the second quarter of 2025.
The Act will be amended to include new definitions for “virtual assets” and “virtual asset business operators” in order to facilitate this. These new rules will be in line with the nation’s strict approach towards the crypto sector.
South Korea Heightens Crypto Regulatory Watch
South Korea has been trying to notch up its regulatory watch on the crypto sphere for quite some time now. However, this comes as a direct result of an increase in crypto scams, illegal trade and crypto frauds that have been happening in the nation.
Just recently, the country’s lawmakers were critical of Avail (AVAIL) and asked financial officials for relevant information on Avail’s odd trading on Bithumb.
Additionally, the South Korean financial authority had launched an investigation into Upbit’s market dominance as the nation’s largest cryptocurrency exchange.
The increasing use of virtual assets in South Korea is the direct cause of all these attempts to increase restrictions in the crypto space. In the first quarter of 2024, the South Korean won (KRW) overtook the US dollar as the most actively traded currency in the global cryptocurrency market, according to a Bloomberg report.
Strong individual investor participation and a sizable trading volume are markers of the South Korean cryptocurrency market’s expansion. The rise in interest in decentralized currencies and the young generations openness to adopt new financial tools has resulted in South Korea having one of the most prominent crypto userbase in the world.
By the end of 2023, there were 6.45 million active users on registered cryptocurrency exchanges, up 390,000, according to data from the Korean Financial Intelligence Unit (KOFIU).