TLDR
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South Korea removes the 1 million won threshold from its crypto Travel Rule.
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All registered VASP transfers will require sender and recipient information.
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New AML checks target overseas exchanges, personal wallets and risky transfers.
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Crypto firms face tougher financial, staffing and internal control standards.
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Expanded Travel Rule requirements will take effect six months after promulgation.
South Korea approved tougher crypto transfer and VASP regulations after the Cabinet backed key enforcement amendments on August 11. The package now removes the 1 million won Travel Rule threshold and expands controls on overseas transfers and personal wallets. It also strengthens registration standards, shareholder reviews, financial requirements, staffing rules, infrastructure duties, and internal compliance systems for crypto firms.
South Korea Expands Travel Rule and Transfer Checks
South Korea will apply the Travel Rule to every transfer between registered virtual asset service providers, regardless of value. The current framework only covers transfers worth at least 1 million won, equal to roughly $700, between registered providers. Regulators in South Korea said users could avoid reporting requirements by splitting larger transfers into smaller transactions below that threshold.
The Financial Intelligence Unit cited one specific case involving about 200 million won deposited into a local crypto exchange. The user bought Tether and then completed 216 withdrawals through the exchange, with each transfer staying below 1 million won. South Korea designed the expanded Travel Rule to reduce similar attempts to bypass anti-money laundering controls across domestic platforms.
Receiving platforms must collect sender and recipient information before completing covered transfers, and they may reject incomplete transactions. South Korea will also require much stronger risk checks for transfers involving overseas exchanges, personal crypto wallets, and recipients. Crypto firms must monitor transfers above 10 million won involving foreign platforms or wallets for suspicious activity under new controls.
South Korea Tightens VASP Registration Standards
South Korea also expanded reviews of major shareholders connected with registered virtual asset service providers under the amended decree. The rules cover shareholders who appoint representatives or most directors, including owners behind corporate shareholders under the broader review. Regulators will examine financial condition, criminal records, governance standards, social creditworthiness, and links to troubled financial institutions.
A registered VASP must generally maintain a debt ratio of 200% or less under the new framework for reporting eligibility. Firms must also maintain qualified staff, suitable technology, security equipment, accident prevention systems, and effective internal controls for daily operations. Existing providers will receive a one-year transition period for several financial, staffing, infrastructure, and internal control requirements.
The registration provisions will take effect on August 20, 2026, following earlier amendments to the underlying financial law. South Korea will enforce the newly expanded Travel Rule and related transfer requirements six months after formal promulgation. Together, the measures create a broader compliance framework for domestic crypto firms and cross-border virtual asset activity across regulated markets.
