South Korea to Enhance Cryptocurrency Monitoring for Transfers Below 1 Million Won — New Regulations Approaching

South Korea is set to enhance regulation of cryptocurrency transfers below 1 million won, addressing a loophole that authorities claim has been increasingly exploited for the movement of illicit funds without triggering identity verification.

This initiative will broaden the country’s existing travel rule, which primarily pertains to larger transactions.

South Korea will expand its crypto Travel Rule to encompass transactions under $700, closing a loophole that has been used to avoid identity verification.#SouthKorea #Cryptohttps://t.co/LBJKNcmMQg

— Cryptonews.com (@cryptonews) November 28, 2025

The proposal is currently under review by financial authorities following the establishment of a task force led by the Korea Financial Intelligence Unit (FIU) aimed at amending the Act on Reporting and Using Specified Financial Transaction Information, commonly known as the Special Act.

Regulators Focus on Small Crypto Transactions as Smurfing Increases

As reported by local media, officials are assessing whether to mandate exchanges to gather and disclose sender and recipient details for all virtual asset transfers, including those valued at 1 million won or less.

The travel rule, often referred to as a real-name system for cryptocurrency, requires exchanges to authenticate and document user information such as names and wallet addresses during deposits and withdrawals.

Authorities have highlighted the rising trend of “smurfing,” a technique where large amounts are divided into numerous smaller transfers to evade reporting thresholds.

While larger transactions have been monitored for some time, officials suspect that criminals are shifting their activities toward lower-value transactions to circumvent existing regulations.

Financial authorities have associated these trends with tax evasion, drug trafficking, and the transfer of illegal funds abroad.

On November 29, the inaugural meeting of the FIU task force, led by Director Lee Hyeong-ju, convened to outline its broader reform agenda.

The discussions are centered on tightening oversight of virtual asset service providers, aligning domestic regulations with international standards set by the Financial Action Task Force, and improving inspection and sanctioning processes.

Officials have also acknowledged that the anti-money laundering framework, established over two decades ago in South Korea, has not kept pace with cross-border digital crime and the rapid growth of virtual assets.

South Korea Moves to Suspend Suspicious Crypto Accounts

In addition to expanding the travel rule, the task force is contemplating further measures to prevent funds from vanishing before investigations can commence.

This includes the introduction of an account suspension system that would permit authorities to temporarily freeze accounts suspected of being linked to serious offenses.

The suggested amendments would also extend anti-money laundering responsibilities to certain professionals, such as lawyers and accountants, who may engage in complex financial transactions.

The crackdown on small transfers is part of a broader tightening of crypto regulations that is already in progress.

Local exchanges have been instructed by the Financial Supervisory Service to implement continuous monitoring systems to detect unusual trading and report any suspicious activities to regulators.

South Korea has similarly restricted access to international transactions deemed high risk, compelling major app stores to remove unregistered foreign applications that serve the Korean market.

At the same time, exchanges are facing less scrutiny regarding their financial health and ownership structures.

Proposed regulations would prohibit individuals with prior convictions for tax or drug-related offenses from becoming significant shareholders in licensed crypto companies.

Starting in the second half of 2025, businesses engaged in cross-border crypto transactions will also be required to preregister and submit regular reports to the Bank of Korea.

South Korea will share crypto transactions by non-residents on local exchanges such as Upbit and Bithumb, with countries worldwide.#SouthKorea #CryptoTransaction #SouthKoreaCryptohttps://t.co/ZD56JHeM9H

— Cryptonews.com (@cryptonews) September 2, 2025

These domestic initiatives are occurring alongside South Korea’s involvement in international data-sharing efforts.

The nation has joined the OECD’s Crypto-Asset Reporting Framework, which will facilitate tax authorities in exchanging standardized information on crypto transactions across borders.

Transaction records are anticipated to begin collection next year, with comprehensive information sharing expected to commence in 2027.

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