South Korea Tightens Oversight of Overseas Crypto Transfers

Highlights:

• South Korea will require registration for firms handling overseas crypto transfers.
• Exchanges and custody firms now face direct finance ministry oversight.
• Illegal foreign exchange violations may draw tougher penalties.

South Korea has approved foreign exchange rules that place cross-border virtual asset activity under direct state supervision. The measure requires crypto firms handling overseas crypto transfers to register with the Minister of Economy and Finance before operations. Lawmakers passed the amendment to the Foreign Exchange Transactions Act on May 8. According to local reporting, the revision responds to wider stablecoin and digital asset use in international payments.

Crypto Transfers Move into Finance Ministry Oversight

The amended law defines virtual asset transfer business as an activity involving sale, purchase, or exchange between South Korea and overseas markets. Therefore, exchanges, custody providers, and similar operators will need registration if they support those services. Officials said the change aims to improve transparency in a market that has moved faster than older foreign exchange rules. Until now, regulators have had limited tools to track digital asset flows that crossed borders through crypto platforms.

JUST IN: South Korea passes amendments to the Foreign Exchange Transactions Act, adding a register-for-foreign-asset transfers rule for VAs and tightening penalties (up to 1 year prison or 100M KRW fine). This could influence cross-border crypto flows and exchange compliance i… pic.twitter.com/PAq1FChZow

— Bpay News (@bpaynews) May 8, 2026

Under the new framework, the government plans to build a monitoring system for virtual asset transactions linked to foreign exchange activity. Stablecoin transfers will also fall within that supervisory structure, since officials see them playing a larger cross-border settlement role. The amendment combines proposals from lawmakers in both major parties. Representative Choi Eun-seok of the People Power Party and Democratic Party lawmakers Kim Tae-sun and Choi Ki-sang each backed related bills before lawmakers merged the measures.

The revision also reshapes rules for specialized foreign exchange businesses. Existing categories, including money changing and small-value overseas remittances, will move toward general money changing and overseas payment settlement services. Authorities will also gain clearer grounds to revoke registrations when operators exceed their approved business scope. In addition, the finance minister can cancel registrations for money changers that have effectively closed after tax filings or registration cancellation.

Penalties and Tax Talks Add Pressure on Platforms

The law also raises penalties for illegal foreign exchange activity. Payment procedure violations currently carry administrative fines of up to 50 million won, or about $36,200. However, if investigators find that a violation aimed to produce improper gains, offenders may face criminal penalties. The revised law allows up to one year in prison or a fine of up to 100 million won, about $72,500.

Additionally, the tougher framework arrives as South Korea increases pressure on digital asset platforms. The Financial Intelligence Unit plans to meet with domestic crypto exchanges after the legislative notice period for AML rule changes ends on May 11, 2026. The agency wants industry feedback before finalizing changes to the Specific Financial Information Act enforcement decree. An FIU official said regulators want rules that exchanges can follow and accept.

Meanwhile, South Korea recently announced plans to introduce virtual asset taxation effective January 1, 2027. Profits above 2.5 million won will face a 22% tax rate, while tax authorities will collect data from major platforms including Upbit, Bithumb, and Korbit.

South Korea to Begin Virtual Asset Taxation in January 2027

According to Edaily, the South Korean government plans to begin taxing virtual assets as scheduled starting in January next year. The National Tax Service is currently coordinating with the country’s five major virtual… pic.twitter.com/pYVmktCW67

— Wu Blockchain (@WuBlockchain) May 7, 2026

However, industry groups have raised concerns over gaps in the planned tax system. They cite difficulties tracking U.S. transactions, no loss carryover, different treatment from stocks, and unclear rules for airdrops and reward events.