The South Korean government is advancing plans to amend its Foreign Exchange Transactions Act to tighten oversight of virtual asset service providers (VASPs). The proposed changes address rising concerns over crypto-related money laundering and foreign exchange crimes.
The amendment bill, sponsored by National Assembly member Choi Eun-Seok from the People Power Party, would require VASPs involved in cross-border transactions to register under the revised Act. These entities must also produce monthly reports of each user’s usage data with the Bank of Korea. It will go hand in hand with other measures to improve the authorities’ capabilities to control operations with digital assets.
Choi spoke about the need to regulate it as soon as possible due to the growth of unlawful financial transactions connected with virtual assets. He pointed out that since there are no monitoring tools, money laundering, and other illegitimate transactions are frequent, so introducing a proper monitoring system would significantly reduce these threats.
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Rising Suspicious Transactions Prompt New Measures
The urgency for regulatory updates has been underscored by a recent report from the Korean Financial Intelligence Unit (FIU). The agency said that the cases of suspicious transactions rose by 48.8% in the past year compared to the previous year. Fueled by this trend, the Ministry of Economy and Finance must broaden its concepts of virtual assets and connected service suppliers before enforcing this change.
Choi Sang-mok, Korean Minister of Economy and Finance, stated that the proposed amendment would be implemented through a consultative and legislative process. Choi opined that the government plans to pass the revised Act by 2025; enough preparation should have been made to meet any procedural legislative requirements.
A Balanced Approach to Crypto Regulation
The proposed amendment reflects South Korea’s commitment to balancing innovation and regulation within its cryptocurrency industry. The region has been recognized for its efforts to foster a structured and transparent crypto ecosystem. The government seeks to enhance oversight without stifling the growth of blockchain and financial technology sectors.
The planned changes represent a significant step in curbing illicit financial activities while promoting a secure and organized crypto market. With the amendment progressing through legislative processes, South Korea is positioning itself as a leader in crypto regulation.
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