South Korea will mandate reporting of cross-border stablecoin transactions by late next year, Finance Minister Choi Sang-mok said on Oct. 25, and a virtual asset committee led by the Financial Services Commission will launch in November to discuss whether to institutionalize virtual assets1.
Choi, speaking to reporters during the Group of 20 Finance Ministers and Central Bank Governors Meeting in Washington, said rising stablecoin use in cross-border transfers prompted the plan. Stablecoins are virtual assets pegged to the U.S. dollar at a 1:1 ratio1.
"We plan to require virtual asset providers to register in advance and mandate the regular reporting of cross-border transaction details to the Bank of Korea (BOK)."
The government plans to amend the Foreign Exchange Transactions Act in the first half of next year, classifying virtual assets as a third category distinct from foreign exchange, external payment instruments and capital transactions. Once the provision is established in the second half of next year, businesses such as virtual asset exchanges must register in advance to handle cross-border virtual asset transactions and report details to the BOK monthly1.
Reports are expected to include the transaction date, amount, type of virtual asset and identifying details of both sender and receiver. The data may later be shared with the National Tax Service, the Korea Customs Service and the Financial Supervisory Service to monitor illegal activity1.
Korea Customs Service data showed that from 2020 to July 2023, virtual asset-related crimes accounted for 9 trillion won out of the 11 trillion won detected in foreign exchange violations, about $6.4 billion. Stablecoins have faced criticism for misuse in illegal foreign exchange activity, including corporate tax evasion and money laundering for drugs and gambling1.
Choi said establishing a monitoring system is different from recognizing institutionalization, and that the question of institutionalizing virtual assets will be discussed by the committee launching under the Financial Services Commission in November1.
What it means for players
The measures described target cross-border transfers of stablecoins and the exchanges that handle them, not betting itself. For people in South Korea who move money to or from gambling sites using stablecoins such as Tether, the reporting requirement would place the transaction details, including sender and receiver identities, with the Bank of Korea, and the data may be shared with tax and customs authorities and the Financial Supervisory Service1. The article states that stablecoins have been criticized for use in money laundering connected to gambling, among other illegal activity1. No details have been reported on how the rules would treat individual users as opposed to registered businesses, or on any thresholds.
What happens next
The Foreign Exchange Transactions Act is to be amended in the first half of next year, with the provision established in the second half of next year1. The virtual asset committee is to launch under the Financial Services Commission in November1. Whether virtual assets will be institutionalized has not been decided and is to be discussed by that committee1.
For background on how gambling is regulated and licensed across the region, see Gambling Regulators and Licenses in Asia: Who Licenses What and How to Check, and for the South Korean market specifically, Can I Gamble in South Korea?.
