South Korea tightens control over crypto transfers: new threshold and requirements for all participants
South Korea's financial intelligence unit, operating under the Financial Services Commission (FSC), has proposed expanding the Travel Rule to cryptocurrency transactions below the current threshold of 1 million won (approximately $650). This proposal marks a significant tightening of digital asset regulation in the country.
A key aspect of the new measure is that Travel Rule requirements will apply to both sides of a transaction — both the sender and the recipient. Previously, this rule, which obligates crypto platforms to transmit information about transaction parties, only applied to transfers exceeding the specified threshold. Now, the regulator intends to close the loophole that allows bypassing controls through small transactions.
Stepping Up the Fight Against Offshore Platforms
In addition to lowering the threshold, the agency has called for intensified measures against offshore and unregistered crypto exchanges. The South Korean market has long suffered from the activities of such platforms, which often operate outside the legal framework, creating risks for investors and facilitating money laundering. The new approach implies that all market participants, including foreign platforms serving local users, will have to comply with strict identification and reporting standards.
This decision is a logical continuation of Seoul's policy to combat anonymity in the crypto sphere. The Travel Rule, originally developed by the FATF for traditional finance, has been actively implemented in the digital asset industry in recent years. South Korea, being one of the most active cryptocurrency markets in the world, demonstrates its commitment to global standards while adapting them to local specifics.
Analytical commentary: Lowering the threshold to zero (effectively eliminating the threshold) and extending requirements to both sides of a transaction is a step that could seriously complicate the operation of P2P platforms and decentralized services in the region. However, for institutional players and registered exchanges, this merely means formalizing already existing KYC/AML procedures. The market continues to move towards full transparency, and South Korea is acting as one of the main drivers in this regard.