South Korea Weighs Allowing Fintech Firms Into Cross-Border Crypto Transfer Business

South Korean financial authorities are considering allowing fintech companies to participate in a new cross-border virtual-asset transfer business that is set to take effect in December. The move could broaden the market for blockchain-based overseas remittances and foreign-exchange services.

The government has recently started work on an enforcement decree for the revised Foreign Exchange Transactions Act and is reviewing registration requirements for virtual-asset transfer operators, SBS Biz reported on June 19.

The revised law, promulgated on June 2, will take effect in December after a six-month grace period. It defines cross-border transfers of virtual assets as a "virtual asset transfer business" under the Foreign Exchange Transactions Act and brings them under a management and supervisory framework.

Virtual-asset transfer operators will be required to register with the finance minister. When cross-border transfer transactions occur, they must report related information through the Bank of Korea's foreign-exchange electronic network. The government plans to bring virtual-asset transfer transactions, which have so far remained outside the foreign-exchange regulatory system, into the formal framework to manage risks related to money laundering and illegal foreign-exchange transactions.

The Ministry of Economy and Finance and the Bank of Korea are collecting industry feedback through meetings and other channels and are working on the detailed design of the system for implementation later this year, according to the report.