South Korea is considering allowing multiple types of participants, including exchanges and financial technology companies, to take part in an upcoming virtual asset overseas remittance business system, ChainCatcher reported, citing Korean media outlet SBS Biz. The system is expected to be implemented in December this year and centers on how cross-border virtual asset transfers will be registered, reported and supervised.
Cross-Border Virtual Asset Transfers to Enter the Foreign Exchange Framework
According to people familiar with the matter cited in the report, the South Korean government has recently begun drafting enforcement rules for partial amendments to the Foreign Exchange Transactions Act. Authorities are also reviewing registration requirements for businesses engaged in virtual asset transfer activities.
The central element of the amendment is to bring cross-border virtual asset transfers under the regulatory framework of the Foreign Exchange Transactions Act. These activities would be defined as a “virtual asset transfer business,” creating a clearer legal category for companies that intend to handle such transactions.
Under the structure described in the report, companies seeking to operate a virtual asset transfer business would be required to register with the office of South Korea’s Minister of Economy and Finance. When cross-border transfer transactions occur, the companies would also have to report relevant information through the Bank of Korea’s foreign exchange computer network.
Registration and Reporting Are the Main Focus of the System Upgrade
The report noted that cross-border virtual asset transactions had previously remained outside the foreign exchange regulatory framework. This raised concerns that such transactions could be used for illegal foreign exchange dealings or money laundering activities. The planned system improvement is designed to bring virtual asset transfer transactions into a formal management and supervisory structure.
Based on the disclosed information, South Korea’s planned framework is not limited to a single type of institution. Instead, exchanges, fintech companies and other relevant parties may be allowed to participate in the virtual asset overseas remittance business system once it is launched.
As the government drafts the enforcement rules and reviews registration requirements, companies that intend to engage in cross-border virtual asset transfers would need to follow the revised rules, complete the required registration process and submit transaction information through the designated reporting channel when cross-border transfers take place.