South Korea Seeks to Apply Crypto Travel Rule to All Transfers, Regardless of Amount

South Korea plans to expand the crypto travel rule so virtual-asset service providers must share transaction information with counterparties for all transfers, regardless of size. The government also will require firms to submit details on major shareholders when registering as virtual-asset service providers and will spell out grounds for rejecting registrations based on financial condition and social creditworthiness.

According to the Ministry of Government Legislation’s public lawmaking portal on Aug. 10, a proposed revision to the enforcement decree of the Act on Reporting and Use of Certain Financial Transaction Information, prepared by the Financial Services Commission, completed the ministry’s review on Aug. 4 and passed a vice-ministerial meeting on Aug. 6. It is scheduled to be submitted to the Cabinet on Aug. 11.

The revision would sharply broaden the information-sharing requirement for virtual-asset transfers. Currently, virtual-asset service providers must provide relevant information to the receiving provider only when transferring virtual assets worth at least 1 million won. Under the revision, the requirement would apply to all virtual-asset transfers regardless of amount.

The proposal also clarifies the scope of major-shareholder disclosures. If a provider’s largest shareholder is a corporation, the filing requirement would extend to that company’s largest shareholder and chief executive officer. Required disclosures would include the major shareholder’s real-name identity and shareholding status.

The standards for rejecting registrations would also be tightened. Applicants must not have undermined sound credit order through debt default or similar conduct over the past three years, and must not have been deemed an insolvent financial institution within the past five years. The head of the Korea Financial Intelligence Unit could also reject a registration if an applicant lacks the personnel, computer systems or other facilities needed for expertise and soundness in virtual-asset trading.

The revision adds steps providers must take during asset transfers. If a provider receives virtual assets from another provider without the related transfer information, it would be required to request that information from the counterparty.

The enforcement decree revision follows amendments to the Act on Reporting and Use of Certain Financial Transaction Information promulgated on Feb. 19. The revised law is set to take effect on Aug. 20.