The essence of the new requirements
According to the approved document, all service providers engaged in cross-border transfers of virtual assets must complete preliminary registration with the Ministry of Economy and Finance. After registration, each transaction involving the movement of cryptocurrency must be recorded in the Bank of Korea's electronic foreign exchange control system.
The law will take effect six months after its official promulgation, which is scheduled for June 2, 2026. Thus, the new rules will come into force by the end of 2026.
Purpose and reasons for increased control
Authorities note that the need for such measures has long been overdue. As digital assets have grown in popularity, cases of using cryptocurrencies to circumvent foreign exchange laws and conduct illegal financial activities have increased. The new system is designed to close regulatory gaps that have existed in this area.
Special attention in the amendments is given to stablecoins. The government intends to bring the unregulated influx of these assets into the country under control. From now on, stablecoin operations will be treated similarly to traditional foreign exchange transactions involving the Korean won or foreign currencies.
Oversight mechanisms
The law establishes a comprehensive system for monitoring the movement of digital funds across borders. Information about transfers will be simultaneously submitted to several agencies. These include the National Tax Service, the Korea Customs Service, the Financial Supervisory Service, and the Financial Intelligence Unit. Such an approach allows for comprehensive checks of transactions for illegal activity.
Violations of the new rules carry serious penalties. Cryptocurrency companies face fines similar to those applied to violators in the traditional foreign exchange market. If a transaction is proven to be conducted for illegal profit, the offender faces up to one year in prison or a fine of up to 100 million won (approximately 75,000 US dollars).
Future prospects
This decision is part of a larger South Korean strategy to regulate digital assets. The country has already passed the Virtual Asset User Protection Act (VAUPA), and is now preparing the second phase of reforms, known as the Digital Asset Basic Act (DABA). Although the adoption of DABA has faced delays due to disputes over who can issue won-pegged stablecoins, the current amendment to the Foreign Exchange Transactions Act represents a concrete and already implemented step forward.