South Korea is set to tighten its regulatory framework for cryptocurrency transactions by expanding its anti-money laundering (AML) rules. Under the new measures, the crypto Travel Rule will cover transfers below 1 million won (approximately $680), closing a loophole that allowed users to split transactions to avoid identity verification.
Background: The Virtual Asset Users Protection Act
The expansion builds on the Virtual Asset Users Protection Act, which came into effect in July 2024. The law targets insider trading, market manipulation, and other illegal activities involving virtual assets. It also empowers regulators to inspect exchanges and enforce penalties for non-compliance.
Stricter Oversight for Small Transfers
Financial Services Commission (FSC) Chairman Lee Eok-won emphasized the government’s commitment to combating illegal crypto activity. “We will crack down on crypto money laundering by expanding the Travel Rule to transactions under 1 million won,” he told the National Assembly’s Legislation and Judiciary Committee.
Exchanges will now be required to collect and share sender and receiver information for smaller transfers, preventing users from bypassing existing identity checks.
High-Risk Offshore Exchanges Targeted
The FSC also plans to block access to high-risk offshore exchanges that pose threats of tax evasion, drug trafficking, and illicit overseas payments. In addition, exchanges will face stricter financial reviews, and eligibility for Virtual Asset Service Provider (VASP) registration will be tightened. Individuals with records of drug or tax-related crimes will be prohibited from becoming major shareholders in licensed crypto firms.
International Cooperation and Early Intervention
South Korea’s Financial Intelligence Unit will gain early account-freezing powers in serious cases, preventing illicit funds from being moved during investigations. The government also aims to strengthen collaboration with international bodies, including the Financial Action Task Force (FATF), to ensure cross-border compliance.
Officials plan to finalize the new framework in the first half of 2026, with lawmakers reviewing the proposed legal changes before implementation.