South Korea’s New Cryptocurrency Regulations
In a bid to address the financial risks associated with cryptocurrency transactions, South Korea is set to reinforce regulations regarding exchanges involving amounts less than 1 million won (approximately $600). This initiative, commonly referred to as the “travel rule,” aims to mitigate the risk of illicit activities aligned with the practice known as “smurfing.” This tactic allows users to evade identity verification by breaking down large transactions into smaller ones.
Regulatory Measures
According to local news reports, South Korean financial regulators are considering an extension of the travel rule which requires crypto exchanges to gather and verify the identities of both senders and recipients for transactions under the specified threshold. Currently, this regulation mandates that local exchanges collect detailed information, including names and wallet addresses, for all deposits and withdrawals.
Task Force and Review
The discussions come on the heels of a newly established task force by the Korea Financial Intelligence Unit (FIU), which is reevaluating the Act on Reporting and Using Specified Financial Transaction Information, referred to as the Special Act. The motive behind this review stems from a noticeable uptick in smurfing activities that criminals employ to escape scrutiny from regulatory measures.
