South Korea to Directly Oversee Crypto Cross-Border Transfers After FX Law Revision Passes

South Korea will set up a direct oversight framework for overseas transfers of virtual assets, or cryptocurrencies, and cross-border movements of stablecoins. Under the revised rules, related businesses must register with the finance minister, while penalties for illegal foreign-exchange transactions will be increased.

Edaily reported on May 8 that the National Assembly passed the amendment to the Foreign Exchange Transactions Act at a plenary session on May 7. The revision newly defines virtual-asset transfer services and introduces a registration requirement for relevant operators.

Under the bill, a virtual-asset operator that moves assets between South Korea and overseas through the sale, purchase or exchange of virtual assets will be classified as engaging in a virtual-asset transfer service.

Crypto exchanges, custodians and other businesses that conduct overseas transfer services will be required to register with the finance minister. The government plans to use the system to directly monitor cross-border flows of virtual assets, including stablecoins, within the foreign-exchange authorities' supervisory framework.

The system for specialized foreign-exchange businesses will also be overhauled. Existing categories such as money-changing, small-value overseas remittance and other specialized foreign-exchange businesses will be reorganized around general money-changing and overseas payment and settlement services. The revision also creates grounds to revoke the registration of specialized foreign-exchange operators that exceed the scope of permitted business.

Penalties for illegal foreign-exchange transactions will be toughened as well. Violations of payment procedures currently carry an administrative fine of up to 50 million won ($36,200). Under the revision, if authorities find the violation was intended to generate improper gains, offenders may face up to one year in prison or a fine of up to 100 million won ($72,500).

Oversight of money changers that have effectively shut down will also be strengthened. If a business reports its closure to a tax office or its business registration is canceled, the finance minister will be allowed to revoke its registration ex officio.

Rep. Lim I-ja, chair of the National Assembly's Strategy and Finance Committee, said the measure is intended to establish a virtual-asset monitoring system and foster a sound foreign-exchange trading ecosystem.