South Korea Proposes Extending Crypto Travel Rule to Lower-Value Transfers
South Korean regulators are considering extending the crypto Travel Rule to include transfers of 1,000,000 won or less to close smurfing loopholes and require identity verification for small transfers. This would require exchanges to collect and share sender and recipient information for all crypto transfers, including those at or below the 1,000,000 won threshold.
To coordinate broader reforms and revise the Special Act, an FIU task force led by Director Lee Hyeong-ju has been formed. The group's goals include tightening anti-money laundering (AML) controls, aligning with Financial Action Task Force (FATF) standards, and strengthening inspection and sanctioning mechanisms for virtual asset providers.
Possible new measures under consideration include an account suspension system to temporarily freeze accounts linked to serious crimes, extending AML obligations to professionals such as lawyers and accountants, and barring individuals with past tax or drug conviction records from becoming major shareholders in licensed crypto firms.
Local crypto exchanges are being urged to implement 24/7 monitoring to detect abnormal trading activity and promptly report suspicious behavior to regulators. International controls on high-risk transactions are also being tightened, and unregistered foreign crypto apps may be removed from app stores.
Starting from the second half of 2025, cross-border crypto firms will be required to preregister and submit regular reports to the Bank of Korea as part of the broader tightening of cryptocurrency regulation. Additionally, South Korea recently joined the OECD Crypto-Asset Reporting Framework to enable cross-border information exchange. Transaction records are expected to start being collected next year, with full information sharing slated for 2027.
