South Korean authorities have announced their plan to fully regulate cross-border crypto transactions by the end of 2025 to combat a ‘blind spot’ that allows tax evasion by foreign exchanges.
Koran authorities will regulate cross-border crypto transactions
According to local news media outlet Edaily, South Korean Vice Prime Minister (DPM) Choi Sang-mok shared the country’s plan to regulate cross-border crypto transactions at a Group of 20 (G20) meeting in Washington.
Choi revealed that the Korean government plans to create a legal basis for foreign exchange supervisory authorities to monitor and share these transactions with relevant financial authorities.
Starting next year, Korean authorities will create new definitions of “virtual assets” and virtual asset operators in the Foreign Transaction Act. These definitions will “define virtual assets as a ‘third type’ that is not included in foreign exchange, external payment instruments or capital transactions,” Choi explained on Thursday.
As a result, cryptocurrency deposits and withdrawals by foreign operators, customers and personal wallets will be defined as a ‘cross-border crypto transaction’. In addition, companies handling cross-border transactions involving crypto assets must register with the Korean financial authorities and report transaction data to the Bank of Korea on a monthly basis.
Choi noted that the information collected would also be shared with the National Tax AuthoritiesKorean customs, financial authorities and international financial centers to monitor illegal transactions for statistics, analysis and investigation.
Korea’s increasing demand for cross-border transactions
During the G20 meeting, South Korea’s DPM explained that the new regulatory plan comes amid an increase in cross-border crypto transactions. Choi revealed that the recent surge is due to stablecoins popularitybecause it can be used for cross-border transactions and payments “just like real foreign currency.”
However, the high demand for cross-border transactions using crypto assets cannot be verified and regulated as there is no legal basis for crypto assets in the Foreign Exchange Transactions Act.
Recently, stablecoin listings on domestic exchanges have increased, and the daily trading volume has already exceeded 300 billion won this year, compared to 191 billion won last year. Cross-border transactions involving virtual assets are increasing, but there is no agreement yet on their legal nature.
This created what was said to be a “blind spot.” exploited for illegal activities, concealing criminal proceeds and tax evasion. According to the report, the National Tax Administration and Korean Customs rely on individual requests or seizure orders to obtain information about cross-border crypto transactions.
South Korea’s Ministry of Economy and Finance plans to complete the revision of the Foreign Exchange Transactions Act and related laws in the first half of next year. Authorities reportedly expect to officially implement the monitoring system in the second half of 2025.
“The formal inclusion or otherwise of virtual assets in the system, such as their use as a trading instrument for trading or capital transactions other than the monitoring system, will be discussed in the ‘Virtual Asset Committee’ to be launched next month under the leadership of Financial Services Commission, and the ministry will also participate,” Choi concluded.
Total crypto market capitalization is at $2.27 trillion in the weekly chart. Source: TOTAL on TradingView
Featured image from Unsplash.com, chart from TradingView.com