South Korea Panel Approves FX Law Revision to Bring Crypto Firms Under Regulation

A bill to bring virtual asset operators under South Korea’s foreign-exchange regulatory framework has passed the National Assembly’s Strategy and Finance Committee.

Digital Asset reported on May 4 that the committee approved an amendment to the Foreign Exchange Transactions Act at a plenary meeting on April 30. The bill will next be reviewed by the Legislation and Judiciary Committee before going to a full Assembly vote.

The amendment was prepared as a consolidated alternative to separate bills introduced by People Power Party lawmaker Choi Eun-seok and Democratic Party lawmakers Kim Tae-seon and Choi Ki-sang.

The centerpiece of the bill is the inclusion of crypto businesses in the foreign-exchange regulatory system. It creates a new category of “virtual asset transfer business” and requires operators seeking to handle virtual asset transfers between South Korea and overseas to register with the finance minister.

Businesses subject to registration must already have completed virtual asset service provider reporting under the Act on Reporting and Use of Certain Financial Transaction Information. They must also meet requirements including systems to relay, concentrate and exchange transaction data, as well as links to relevant electronic networks.

The Strategy and Finance Committee said the bill was prompted by the spread of digital assets and advances in fintech, which have diversified cross-border transaction methods beyond what the current foreign-exchange regulatory system can adequately manage.

The amendment also includes provisions to establish grounds for revoking the registration of specialized foreign-exchange business operators, strengthen penalties for violations of payment procedures, and allow authorities to cancel the licenses of money changers that are effectively out of business.