This news represents a major regulatory shift for South Korea's crypto market. South Korean financial authorities, specifically the Financial Intelligence Unit (FIU), are tightening their grip on virtual assets to prevent money laundering and illicit activities.
Key Highlights of the Regulatory Update:
* Expansion of the Travel Rule: Previously, South Korea’s "Travel Rule" applied only to transactions exceeding 1 million Korean won (approximately $750). Under this rule, exchanges must collect and share the sender’s and receiver’s information. The authorities now plan to apply this to smaller transactions as well, ensuring no transfer goes undetected.
* VASP Regulations: The regulatory framework for Virtual Asset Service Providers (VASPs), such as crypto exchanges, is being significantly strengthened. They will now be required to maintain much higher levels of transparency and compliance.
* Focus on Stablecoins: For the first time, there is a formal discussion regarding the institutionalization of stablecoins (bringing them under legal oversight) and creating specific Anti-Money Laundering (AML) measures for them.
* Special Financial Information Act: The FIU has held its first task force meeting to revise this Act. The goal is to modernize and improve crypto-related laws to match global standards.
Impact Analysis (Summary)
By expanding these rules, South Korea is moving toward one of the strictest crypto environments in the world. While this improves security and legitimacy, it also increases the "compliance burden" for users and exchanges like Upbit and Bithumb, as they will now have to report even very small transfers.