Why did South Korea drop the proposed crypto transfer reporting rule?

South Korea's Financial Intelligence Unit (FIU) withdrew plans to require automatic reporting of crypto transfers above 10 million won after industry participants argued the rule would create excessive compliance burdens. Regulators concluded that transaction size alone was not an effective measure of money laundering risk.

What was the original crypto reporting proposal?

The original proposal would have required domestic virtual asset service providers (VASPs) to automatically report transfers of 10 million won or more involving overseas exchanges or personal wallets. These transactions would have been treated as suspicious by default.

What will replace the mandatory reporting requirement?

Instead of a fixed reporting threshold, crypto firms will be expected to operate their own anti-money laundering (AML) risk management systems. Companies will assess transactions based on qualitative risk factors rather than simply transaction size.

Why did regulators change their approach?

The FIU said a blanket reporting threshold could encourage firms to file reports automatically without properly assessing actual risks. Regulators want exchanges and crypto firms to focus on identifying genuinely suspicious activity through risk-based analysis.

How will the new rules affect Korean crypto exchanges?

Exchanges will gain greater flexibility in managing AML compliance but will also assume more responsibility for identifying high-risk transactions. Firms will need robust internal systems to demonstrate effective risk monitoring and regulatory compliance.

What changes were made to customer verification requirements?

The FIU eased its proposed enhanced due diligence rules. Instead of applying stricter verification requirements to all suspicious transactions, enhanced checks will only be required for cases deemed particularly high risk.

What other regulatory changes were announced?

South Korea delayed a proposed debt ratio requirement for crypto firms by one year and relaxed restrictions on cloud infrastructure. Companies will be allowed to use overseas cloud services in certain cases, provided sensitive personal and credit information is not involved.

What is staying the same under the revised framework?

The government will still expand travel rule requirements to crypto transfers below 1 million won. This means firms must continue sharing transaction information to improve transparency and compliance with anti-money laundering standards.

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Korea eases proposed crypto transfer reporting rules

Written by Mahathir BayenaPublished Jun 5, 2026, 7:30 AM

South Korea's financial watchdog has abandoned plans to require domestic crypto firms to automatically report virtual asset transfers worth more than 10 million won to overseas exchanges and personal wallets.

The Korea Financial Intelligence Unit (FIU) decided to revise the proposal after consulting cryptocurrency exchange executives and industry participants, who argued the reporting requirement would create excessive compliance burdens and lead to indiscriminate reporting.

“If only the amount is used as the standard, companies will report uniformly without judging risk,”

An FIU official said.

Under the revised approach, virtual asset service providers will be responsible for operating their own anti-money laundering risk management systems and assessing suspicious transactions based on qualitative risk factors rather than a fixed monetary threshold.

The FIU also eased proposed customer verification requirements, limiting enhanced due diligence measures to transactions considered particularly high risk rather than applying them broadly to all suspicious cases.

Additional changes include a one-year delay to a proposed debt ratio requirement for crypto firms and greater flexibility for operators to use overseas cloud infrastructure, except where sensitive personal or credit information is processed.

However, regulators will maintain plans to expand travel rule information-sharing requirements to crypto transfers below 1 million won, with the updated framework scheduled to take effect on August 20 following final administrative reviews.