South Korea will tighten regulations on cryptocurrencies valued under $680 and block offshore exchanges deemed "high-risk."

South Korea is preparing to expand its anti-money laundering regulations to include cryptocurrency transactions. As part of the new measures, the government plans to extend the Crypto Travel Rule to transfers of less than 1 million won, equivalent to approximately $680. This step comes in response to growing concerns about illicit financial activity related to cryptocurrencies.

The New Law and Its Implications

The expansion of regulations follows the passage of the Virtual Asset User Protection Act, which took effect last July. This law prohibits insider trading, market manipulation, and illegal trading in virtual assets, and gives regulators broader powers to inspect exchanges and impose fines for violations.

Small Cryptocurrency Transfers Under Scrutiny

Financial Services Commission Chairman Lee Ok-won announced that the government will actively combat illicit financial activity related to cryptocurrencies. "We will combat money laundering using cryptocurrencies by extending the Travel Rule to transactions under 1 million won," he said at a meeting of the National Assembly's Committee on Law and Judiciary.

Under the current threshold, users could break transfers into smaller amounts to avoid identity verification. The new rule will address this gap by requiring cryptocurrency exchanges to collect and transmit information on senders and recipients for small-value transfers.

Blocking High-Risk Offshore Exchanges

Furthermore, as part of the new measures, high-risk offshore exchanges will be blocked from serving South Korean users. This rule is aimed at combating the growing use of cryptocurrencies for tax evasion, drug trafficking, and international payment schemes.

In Conclusion

South Korea is actively working to tighten cryptocurrency regulation, reflecting its commitment to creating a more secure and transparent financial environment. New measures targeting small transfers and offshore exchanges highlight the importance of combating illicit financial activity and protecting virtual asset users. Amid growing volatility and uncertainty in the cryptocurrency market, such steps could have a significant impact on the future of the crypto industry in the country.