korea

South Korea is preparing a sweeping regulatory push aimed at curbing illegal activity in the digital-asset sector. The government’s latest plan widens the scope of the Travel Rule to cover even small crypto transfers while introducing strict barriers that prevent individuals with serious criminal records from becoming major shareholders in virtual-asset businesses.
Expanded Travel Rule and Stronger Market Surveillance
Lee Eok-won, chairman of the Financial Services Commission (FSC), outlined the new measures during the 19th anniversary event of the country’s Financial Intelligence Unit (FIU). He emphasized that authorities will take a tougher stance on money laundering, stating that regulators intend to “strictly crack down on illicit activities exploiting virtual-asset transactions.”
Under the current framework, Korean exchanges must collect sender-and-recipient information for transfers exceeding 1 million won (roughly $730). The new plan broadens this threshold to include all crypto transactions, regardless of size. Regulators argue that criminals have exploited the current exemption by splitting large sums into multiple smaller transfers — a loophole the reform aims to close.
Lee also highlighted a renewed focus on international monitoring, noting that authorities will move to block cross-border crypto dealings with high-risk foreign exchanges associated with laundering activity.
New “Active Account Freeze” Mechanism
Local reporting indicates that individuals with criminal records tied to drug offenses, tax evasion, and other serious violations will be barred from becoming major shareholders in virtual-asset companies. The government also intends to require financial-status verification and additional integrity checks for those seeking to register crypto-asset businesses. These steps are designed to ensure that the management and ownership of crypto platforms remain insulated from criminal influence and maintain financial stability.
To prevent the rapid dissipation of criminal funds during investigations, the FIU is introducing an active account-freeze system — a mechanism that grants authorities immediate power to halt accounts suspected of holding illicit capital. To minimize public inconvenience, the FSC clarified that this tool will be limited to serious offenses that pose risks to public safety, including drug-related crimes and illegal gambling.
Legislative Roadmap and Capacity Upgrades
The FIU plans to publish the details of this comprehensive reform package in the first half of next year before submitting amendments to the Act on Reporting and Using Specified Financial Transaction Information (known as the Special Act) to the National Assembly. To support the expanded mandate, the government intends to bolster the FIU’s operational capacity.
Additionally, regulators will work closely with lawyers, accountants, and tax professionals to strengthen anti-money-laundering systems across related industries, ensuring broad compliance as South Korea steps up oversight of the crypto economy.
Together, these reforms mark one of the country’s strongest moves to date toward creating a cleaner, more transparent digital-asset market — and signal that regulators are preparing for a more heavily supervised era of crypto activity.
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South Korea has temporarily suspended new cryptocurrency lending services following a major liquidation event at the #Bithumb exchange, where over 13% of the 27,000 users were liquidated. This move is a direct response to increasing leverage risks in the market.

Causes and Actions

The Financial Services Commission (#FSC ) of South Korea stated that the suspension is necessary because the current user protection tools are "insufficient" and there are "concerns about harm to a healthy trading order." This decision will last until official guidelines on lending services are issued.