South Korea to Directly Regulate Overseas Crypto Transfers After FX Law Revision Passes Assembly

Summary

The passage of the revised Foreign Exchange Transactions Act will establish a direct government oversight system for overseas crypto transfers and cross-border stablecoin movements.
Crypto exchanges and custody firms engaged in cross-border virtual-asset transfer services will be required to register with the finance minister.
Penalties for illegal foreign-exchange transactions will be strengthened, including up to one year in prison or a fine of up to 100 million won ($72,500), tightening oversight of crypto-related foreign-exchange activity.

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Edaily reported on May 8 that the National Assembly passed revisions to the Foreign Exchange Transactions Act at a plenary session on May 7. The amendments newly define virtual-asset transfer services and impose a registration requirement on related operators.

Under the bill, moving assets between South Korea and overseas through the sale or exchange of virtual assets will be classified as a virtual-asset transfer service. Crypto exchanges, custodians and other businesses engaged in such overseas transfer services will have 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' oversight framework.

The framework for specialized foreign-exchange businesses will also be overhauled. The current categories of money changers, small-value overseas remittance providers and other specialized foreign-exchange businesses will be reorganized around general money-changing services and overseas payment and settlement services.

The revisions also establish a legal basis for revoking the registration of specialized foreign-exchange operators that exceed their permitted business scope.

Penalties for illegal foreign-exchange transactions will be increased as well. Violations of payment procedures currently carry an administrative fine of up to 50 million won ($36,200). Under the revised law, offenders may face up to one year in prison or a fine of up to 100 million won ($72,500) if they are found to have acted to obtain illicit gains.

The government will also tighten oversight of money changers that are effectively out of business. If an operator reports a closure to the tax office or its business registration is canceled, the finance minister will be able to revoke its registration ex officio.

Lim I-ja, chair of the National Assembly's Economic and Fiscal Planning Committee, said the measure is intended to build a virtual-asset monitoring system and foster a sound foreign-exchange transaction ecosystem.