South Korea Mandates Reporting on Cross-Border Stablecoin Transactions to Curb Illicit Activities

South Korea Mandates Reporting on Cross-Border Stablecoin Transactions to Curb Illicit Activities

South Korea plans to implement a virtual asset transaction monitoring system starting in the second half of 2025, requiring businesses involved in cross-border stablecoin transactions to register with authorities and submit monthly transaction reports to the Bank of Korea. The new mandate aims to curb illegal activities such as tax evasion, money laundering, and other foreign exchange crimes often linked to digital assets, which Deputy Prime Minister and Finance Minister Choi Sang-mok highlighted during the recent G20 Finance Ministers’ Meeting.

Addressing the ongoing regulatory challenges, Choi emphasized the lack of a foundational law on virtual assets, which leaves ambiguity in classifying stablecoins in international transactions—whether as a payment method or capital flow. To address this, the government aims to amend the Foreign Exchange Transactions Act, providing a regulatory basis for monitoring and managing these assets.

Since 2020, approximately 81.3% of foreign exchange crimes in South Korea, valued at 11 trillion won (about $7.97 billion), have been tied to virtual assets, as reported by the country’s customs agency. Authorities attribute much of this illicit activity to the rapid rise in digital assets used for cross-border dealings, necessitating more stringent oversight.

South Korea has emerged as a leading crypto hub in 2024, with its rigorous regulation under the Virtual Asset User Protection Act ensuring better customer protection. This framework has led to the shutdown of non-compliant exchanges, allowing users to recover around $12.8 million in stranded investments this year.