The South Korean government tightened requirements for virtual asset service providers (VASPs) and introduced stricter controls over cryptocurrency transfers to strengthen anti-money laundering measures.
South Korea’s Cabinet approved amendments to the enforcement decree of the Specified Financial Information Act. The updated rules clarify registration requirements for crypto companies, expand AML requirements for cryptocurrency transactions, and define customer identification procedures more clearly.
One of the key changes was the removal of the existing KRW 1 million (about $720) threshold for applying the Travel Rule, which was designed to prevent regulatory circumvention through transaction splitting. Once the new rules take effect, information sharing between registered VASPs will become mandatory for all transfers, regardless of value. Receiving platforms will also have to verify the completeness of transaction data and, if required information is missing, request it or reject the transaction.
The amendments also introduced a risk-based approach to transactions involving foreign crypto platforms and self-custody wallets. Transfers to low-risk foreign exchanges will be permitted. Transactions involving most other foreign platforms and self-custody wallets will only be allowed when the sender and recipient are the same person. Transfers to high-risk platforms will be prohibited. Companies processing transactions exceeding KRW 10 million must establish and operate their own suspicious transaction monitoring systems.
Registration requirements for VASPs will also become stricter. The scope of individuals subject to regulatory review now includes shareholders with the authority to appoint the CEO or a majority of the board of directors, as well as controlling persons when the largest shareholder is a legal entity.
The amendments also establish specific registration criteria for crypto companies. To obtain approval, a company must:
- maintain a debt-to-equity ratio of no more than 200%;
- meet financial soundness and business integrity requirements;
- ensure that its executives and major shareholders meet the established qualification standards and have no serious violations of financial regulations.
For existing market participants, the new requirements covering leverage, organizational structure, IT infrastructure, and internal controls will be phased in over a one-year period.
The amendments also clarify customer due diligence (KYC) requirements by formally adopting a risk-based approach for determining when enhanced due diligence is required.
The provisions covering crypto company registration and certain enforcement procedures will take effect on August 20, 2026. The remaining changes will become effective 6 months after the decree is officially published. Authorities also prepared updated VASP registration guidance and will hold a joint public seminar with the Financial Supervisory Service (FSS) for market participants on August 13.
South Korean authorities began strengthening oversight of the crypto market and developing a legislative framework for cryptocurrency regulation in 2022. A year later, the country launched a government-operated cryptocurrency monitoring system, and the National Assembly approved legislation regulating the crypto market. In 2024, regulators tightened oversight of cryptocurrency exchanges, strengthened supervision of stablecoins, and began drafting dedicated rules for cross-border cryptocurrency transactions. In 2025, the government launched a comprehensive reform of the cryptocurrency sector. In 2026, blockchain technology and digital asset market development were incorporated into the country’s economic growth strategy.
