South Korea is weighing a regulatory shift that could allow fintech firms—not just cryptocurrency exchanges—to apply for a new licensing regime for cross-border digital asset transfers. The system is scheduled to take effect in December.
Drafting Enforcement Rules: Cross-Border Crypto Transfers Regulated
According to local media, officials from relevant ministries and industry participants have begun drafting enforcement regulations for amendments to the Foreign Exchange Transactions Act and are reviewing registration requirements for businesses seeking to offer virtual asset transfer services. The amended law was promulgated on June 2 after cabinet approval, with a six-month grace period.
Under the new framework, cross-border transfers involving virtual assets will become a regulated foreign exchange activity. Companies must register with the Ministry of Economy and Finance and report overseas transfer transactions through the Bank of Korea's foreign exchange reporting network.
Authorities argue that cross-border cryptocurrency transactions previously operated outside the country's foreign exchange oversight system, creating risks related to illicit foreign exchange activity and money laundering. The revised framework brings those transactions under formal supervision and reporting requirements.
The law requires applicants to complete VASP registration, connect their systems with institutions responsible for relaying foreign exchange and digital asset transaction information, and satisfy additional facility and personnel requirements to be defined by presidential decree.
Fintech Firms May Gain Market Access
Current VASP rules largely limit eligible firms to cryptocurrency exchanges and certain custodians registered with the Financial Intelligence Unit under the Financial Services Commission. Industry participants had expected the new regime to be dominated by major domestic exchanges like Upbit and Bithumb.
However, government officials are reviewing whether registration should extend beyond exchanges to fintech companies capable of handling cross-border virtual asset transfers. A Bank of Korea official told media that authorities do not necessarily need to restrict the business to existing VASPs if other entities can perform transfer services. The official added that businesses seeking to engage in virtual asset transfer activities may still need foreign exchange-related registration under applicable regulations.
The Bank of Korea said it has held meetings with industry participants and provided guidance on registration requirements and integration with the foreign exchange reporting system.
Industry attention now focuses on whether the final enforcement decree will open the sector to new entrants beyond traditional cryptocurrency trading platforms. Many fintech firms have faced obstacles due to VASP registration requirements and difficulties securing real-name banking relationships. Industry participants believe a separate licensing framework for virtual asset transfers could create opportunities in blockchain-based remittances and foreign exchange services.
The Ministry of Economy and Finance and the Bank of Korea are continuing consultations with industry participants as they finalize detailed rules ahead of the December launch.
Tokenized Stocks Under Securities Classification
The latest regulatory initiative follows recent efforts by South Korean authorities to define how blockchain-based financial products fit within existing rules. Earlier this month, the Ministry of Economy and Finance said tokenized stocks could be taxed under existing securities regulations if the Financial Services Commission formally classifies them as securities. Officials stated that the legal treatment of an asset should depend on its economic characteristics rather than the technology used to issue it.
The Financial Services Commission is expected to release updated token securities guidelines in July as it continues work on a roadmap covering tokenized versions of conventional financial assets, including listed equities.