South Korea to Enforce Reporting  Mandate for Cross-Border Crypto Transactions

South Korea is set to tighten regulations on cross-border cryptocurrency transactions, aiming to curb tax evasion and other foreign exchange-related offenses. The country’s finance minister, Choi Sang-Mok, announced plans to implement a new reporting requirement for businesses involved in crypto asset transfers across borders.

“We will promote preemptive monitoring of virtual asset transactions that are used for tax evasion and currency manipulation across borders,” Choi stated.

Crypto Crimes Dominate Cross-Border Transactions

The finance minister noted that cross-border crypto transactions have been a “blind spot” for tax and customs authorities, allowing criminals to hide illicit funds. According to the Korea Customs Service, digital assets have been involved in 81% of foreign exchange crimes, totaling about $1.2 billion since 2020.

The proposed regulations would require businesses handling cross-border crypto transfers to pre-register with relevant authorities and submit monthly reports to the Bank of Korea. However, implementing these rules depends on establishing a legal framework to support them.

“We will establish new definitions of ‘virtual assets’ and ‘virtual asset business operators’ in the Foreign Exchange Transactions Act,” Choi explained. 

He added that virtual assets would be classified as “third type,” separate from traditional foreign exchange, external payment means, or capital transactions. The finance minister anticipates that legal amendments will be finalized by mid-2025, with the new reporting mandates set to take effect by Q2 2025.

South Korea to Regulate Stablecoins

Alongside these regulatory changes, South Korea’s Ministry of Strategy and Finance intends to apply foreign exchange rules to stablecoins pegged to the US dollar. Recent reports suggest that this regulatory approach may coincide with developing a South Korean won-backed stablecoin.

The ministry acknowledged the importance of stablecoins in the financial system, facilitating cross-border payments within the virtual asset sector and the traditional economy.

NPS Expands Crypto Exposure With Investments in Shares

In a separate development, South Korea’s National Pension Service (NPS) invested nearly $34 million in MicroStrategy shares. This move is regarded as a pro-crypto investment since MicroStrategy is one of the largest corporate BTC holders globally, and its frequent bitcoin acquisitions benefit its stock price.

Apart from MicroStrategy’s shares, reports show that NPS also holds 229,807 shares of Coinbase worth over $45 million. The fund started buying shares in the crypto exchange in 2023, snapping up 282,673 shares, worth $19.9 million at the time at an average price of $70.5.