South Korean authorities have announced plans to fully regulate cross-border crypto transactions by the end of 2025 to combat a “blind spot” allowing tax evasion from foreign exchanges.
Quranic authorities to regulate cross-border crypto transactions
According to local media outlet Edaily, South Korean Deputy Prime Minister (DPM) Choi Sang-mok shared the country’s plan to regulate cross-border crypto transactions during a Group of 20 (G20) meeting in Washington.
Choi revealed that the Korean government plans to create a legal basis for foreign exchange supervisory authorities to monitor these transactions and share them with relevant financial authorities.
Starting next year, Korean authorities will create new definitions of “virtual assets” and “virtual asset operators” in the Foreign Transaction Law. These definitions “will define virtual assets as a ‘third type’ that is not included in foreign exchange operations, external payment instruments or capital transactions,” Choi explained Thursday.
Accordingly, crypto deposits and withdrawals made by foreign operators, clients and personal wallets will be defined as a “cross-border crypto transaction”. Additionally, companies that handle cross-border transactions involving crypto assets must register with Korean financial authorities and report transaction details to the Bank of Korea monthly.
Choi noted that the collected information would also be shared with the National Tax Service, the Korean Customs Service, financial authorities and international financial centers to monitor illegal transactions for statistics, analysis and research.
Korea’s growing demand for cross-border transactions
At the G20 meeting, the South Korean DPM explained that the new regulatory plan comes amid an increase in cross-border crypto transactions. Choi revealed that the recent increase is due to the popularity of stablecoins, as they can be used for cross-border transactions and payments “just like real foreign exchanges.”
However, the high demand for cross-border transactions using crypto assets cannot be verified and regulated because there is no legal basis for crypto assets in the Foreign Exchange Transactions Act.
Recently, listings of stablecoins have increased on domestic exchanges, and the daily trading volume has already exceeded 300 billion won this year, compared to 191 billion won last year. Cross-border transactions involving virtual assets are increasing, but their legal nature has not yet been agreed.
This created a “blind spot” that was allegedly exploited for illegal activities, hiding proceeds of crime and tax evasion. According to the report, the Korean National Tax Service and Customs Service rely on case-by-case requests or seizure warrants to obtain information on cross-border crypto transactions.
South Korea’s Ministry of Economy and Finance plans to conclude the revision of the Foreign Exchange Transaction Law and related laws in the first half of next year. Authorities reportedly expect to officially implement the monitoring system by the second half of 2025.
“Whether or not to formally incorporate virtual assets into the system, for example by using them as a trading instrument for commercial or capital transactions other than the surveillance system, will be discussed at the “ Virtual Assets Committee” which will be launched next month under the leadership of the Financial Services Commission, and the ministry will also participate in it,” Choi concluded.
Total crypto market capitalization is at $2.27 trillion in the weekly chart. Source: TOTAL on TradingView
Featured image from Unsplash.com, chart from TradingView.com
