South Korea tightens control over cryptocurrency transfers: Travel Rule threshold lowered to zero
South Korea's digital asset regulatory landscape is undergoing another significant change. The Financial Intelligence Unit (FIU) under the Financial Services Commission (FSC) has proposed an initiative that could fundamentally alter transaction rules for all market participants.
The main proposal is to extend Travel Rule requirements to all cryptocurrency transfers, including those under 1 million won (approximately $650). Previously, there was a threshold allowing small transactions to be conducted without mandatory information exchange between sender and recipient. Now, the regulator intends to eliminate this "loophole."
Under the new approach, both parties to a transaction — both sender and recipient — will be required to provide their personal data. This means that even for a small transfer, such as $100, platforms will need to identify and verify both participants. This step is aimed at increasing market transparency and combating money laundering.
The FIU is paying particular attention to offshore and unregistered platforms. The regulator is calling for stronger measures against them, including blocking transactions and restricting access for South Korean users. This is part of a global trend where countries are trying to close opportunities for illegal fund circulation through unregulated exchanges.
From my professional perspective, this decision is a logical continuation of Seoul's policy of total control over the cryptocurrency market. However, it is worth noting that lowering the threshold to zero could create serious operational problems for small traders and decentralized platforms. Excessive bureaucratization could lead to capital flight to less stringent jurisdictions, ultimately weakening South Korea's position as a leader in the digital asset space.