South Korea Removes 1M Won Crypto Travel Rule Limit
New regulations aim to tighten oversight on crypto transactions.
1South Korea's New Crypto Regulations
South Korea has expanded the Travel Rule to tighten oversight on crypto transactions. Approved by the cabinet on August 11, the changes cover both local crypto platforms and overseas wallets and exchanges. These regulations aim to reduce money laundering risks, particularly focusing on the issue of large transactions being split into smaller, untraceable amounts.
2Changes to the Travel Rule
The new regulations remove the 1 million won threshold for the Travel Rule. Now, sender and recipient information is mandatory for all crypto transactions, regardless of amount. Platforms can reject transfers if information is missing. This change aims to address the issue of large transactions being split into smaller amounts to evade monitoring, which the Financial Intelligence Unit considers a significant security loophole.
3Overseas Exchanges and Personal Wallets
The new rules also cover transfers between overseas exchanges and personal wallets. Risk-based requirements have been introduced, allowing high-risk transfers to be blocked. Systems to monitor suspicious transactions are mandatory for transfers of 10 million won or more. These measures aim to reduce money laundering risks on overseas platforms.
4New Standards for Crypto Exchanges
Registration requirements for crypto exchanges have also been tightened. Exchanges will undergo more detailed scrutiny of their financial conditions, management structures, employees, IT systems, and security measures. The debt-to-equity ratio must not exceed 200%, and there should be no serious financial or criminal issues. These new standards will take effect on August 20, 2026.
5Transition Period and Compliance
Existing crypto exchanges have been given a one-year transition period to comply with the new regulations. During this period, they must meet financial, personnel, infrastructure, and internal control standards. The new AML rules for crypto transfers will be enforced mid-year following their announcement. This transition period provides exchanges with a crucial opportunity to adapt.
6Case Study: 216 Transactions
The Financial Services Commission shared an example where a 200 million won transfer was split into 216 smaller transactions, each below the previous 1 million won limit. This was seen as a method to bypass transaction monitoring systems. The new regulations aim to prevent such maneuvers.
7Crypto Tax Protests
A petition against crypto taxes in South Korea has surpassed 52,000 signatures. Investors are calling for a review of tax policies. This highlights that crypto regulations are not only about security but also taxation. The new regulations could further fuel these debates.
8Conclusion and Importance
South Korea's move to tighten crypto regulations aims to reduce money laundering risks in the global financial system. Expanding the Travel Rule and introducing new standards could make the crypto sector more transparent and reliable. However, the implementation and impact of these regulations will be closely monitored in the coming years.
Original article: CryptoNinjas — Güney Kore, Kripto Para Seyahat Kuralı Sınırını Kaldırdı