South Korea Tightens Crypto Rules to Curb Tax Evasion and Crime

News

  • Mandatory Monthly Reporting: By Q2 2025, all cross-border crypto firms must pre-register and file monthly reports with South Korea’s central bank.
  • New Crypto Legal Category: South Korea redefines crypto as a unique asset class to close $1.2B tax loopholes and reduce foreign exchange crime.
  • Strict Compliance & Penalties: Under the Virtual Asset Protection Act, crypto firms face hefty fines and mandatory insurance to shield investors.

South Korea’s finance ministry, led by Finance Minister Choi Sang-Mok, has announced upcoming reporting mandates on cross-border cryptocurrency transactions. In a statement at a recent G20 meeting in Washington, Choi revealed that these regulations aim to tackle tax evasion and foreign exchange crimes, areas where virtual asset transactions remain largely unchecked. The measures will require businesses handling international crypto transfers to pre-register with authorities and provide detailed monthly transaction reports to the Bank of Korea.

Under the proposed regulations, South Korea intends to clarify the legal standing of digital assets in its Foreign Exchange Transactions Act. The government plans to define “virtual assets” and “virtual asset business operators” as a new, separate category—distinct from traditional foreign exchange or capital transactions, according to an Oct. 24 report from local Korean news outlet Edaily.

This definition, Choi explained, will establish virtual assets as a “third type,” thereby closing legal loopholes that have allowed digital assets to evade regulatory oversight. According to data from Korea Customs, approximately 81% of foreign exchange crimes—totaling $1.2 billion since 2020—have involved crypto assets.

Tough penalties and insurance rules tighten crypto security in Korea

South Korea’s Virtual Asset Protection Act, which went into force on July 19, takes steps to protect crypto investors even further. This act requires virtual asset service providers (VASPs) to have insurance against cyber dangers and malicious attacks.  Additionally, providers are required to segregate user funds from exchange tokens and conduct regular audits of token listings. The government also intends to enforce significant penalties for crypto-related crimes, including fines and jail time for violators, who could face fines up to five times the value of their illicit gains.

With these measures, South Korea aims to establish a robust framework to regulate cross-border crypto transactions by the second quarter of 2025. This proactive regulatory approach reflects the government’s commitment to curbing financial crimes linked to digital assets while providing stronger protections for crypto investors.

The post South Korea Tightens Crypto Rules to Curb Tax Evasion and Crime appeared first on Crypto News Land.

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