South Korea is accelerating a legislative effort to regulate cryptocurrencies, focusing on cracking down on criminal activities such as multi-level marketing and door-to-door sales involving digital assets. The Ministry of Justice announced that the bill aims to fill legal gaps and significantly strengthen penalties.
Focus on Criminal Activities
The proposed bill will primarily target crimes committed through multi-level and door-to-door sales using cryptocurrencies. Currently, existing laws do not explicitly cover digital currencies in such contexts. A task force comprising the Ministry of Justice, the Financial Services Commission (FSC), the Ministry of Strategy and Finance, and the Fair Trade Commission has been established to clarify punishment grounds and recommend legal amendments.
According to Yonhap News, the Ministry of Justice plans to increase the current penalty of “five years imprisonment or fines up to 50 million won” to “10 years imprisonment or fines up to 500 million won”. Additionally, the government will introduce confiscation rules for criminal proceeds to enhance punishment effectiveness. This move follows a recent court ruling in Suwon District Court that deemed police confiscation of bitcoins inappropriate, highlighting the lack of clear legal basis.
Amending Existing Regulations
The bill also includes amendments to the Act on Regulation of Similar Receiving Act, which governs behavior that procures funds from unspecified persons without authorization. Since South Korea does not recognize digital currencies as legal tender or financial products, the government will regulate them indirectly through this law.
Under the amendments, virtual currency traders involved in sales, brokerage, or arbitration must comply with consumer protection and transaction transparency obligations. Transactions prohibited under the Door-to-Door Sales Act — including multi-level and door-to-door sales — will be banned. Furthermore, the government will amend certain Financial Information Acts to impose anti-money laundering (AML) obligations on crypto exchanges, requiring them to report suspicious activities to the Financial Intelligence Unit.
An FSC official stated: “The amendment plan aims to pass the revised bill within this year. We will clarify punishment grounds for similar receiving behaviors related to virtual currency investments by adding the phrase ‘virtual currency or virtual currency trading’ to the law.”
Analysts view this as a significant step by a major economy to tighten crypto regulation, particularly in protecting investors and combating financial crime. The final bill still requires approval from the National Assembly, but its direction is clear: establishing a healthier order for the digital asset market through legal means.