Finance Minister Choi Sang-mok, second from the right, speaks to reporters at the G20 Finance Ministers’ Meeting in Washington on Friday (local time). Provided by Ministry of Economy and Finance
Written by Lee Yeon-woo
Finance Minister Choi Sang-mok announced Friday that South Korea will require reporting of cross-border stablecoin transactions by the second half of next year, in a bid to prevent illegal activities such as tax evasion.
Choi told reporters at the Group of 20 (G20) finance ministers and central bank governors meeting held in Washington, “As the number of stablecoins like Tether increases, we will continue to expand borders using stablecoins. “The number of transactions that exceed these limits is also increasing.”
“We plan to require virtual asset providers to pre-register and regularly report cross-border transaction details to the Bank of Korea (BOK).”
Stablecoins are virtual assets pegged to the US dollar in a 1:1 ratio. Utilizing blockchain technology, it enables fast and convenient transfers while reducing price volatility compared to other cryptocurrencies. Recently, it has gained popularity as a trade settlement for cross-border transactions, functioning like foreign exchange.
However, stablecoins have also faced criticism for being misused for illegal foreign exchange activities such as corporate tax evasion and drug and gambling money laundering.
According to data from the Korea Customs Service (KCS), of the 11 trillion won arrested for foreign exchange violations from 2020 to July 2023, virtual asset-related crimes accounted for 9 trillion won ($6.4 billion). .
In response to this, the government plans to revise the Foreign Exchange Transactions Act in the first half of next year. Cryptoassets are classified as a third category, distinct from foreign exchange, external payment instruments, and capital transactions.
If this regulation is enacted in the second half of next year, businesses such as virtual asset exchanges will be required to pre-register in order to handle cross-border virtual asset transactions. They will also be required to report details to the Bank of Korea on a monthly basis.
The report is expected to include information such as transaction date, amount, type of virtual asset, and identifying details for both sender and receiver. The data may later be shared with the National Tax Agency, KCS, and the Financial Supervisory Authority to monitor illegal activities and conduct analytical assessments.
Choi emphasized that while there is still no legal agreement on the nature of virtual assets or how to regulate them, proper oversight is needed as they can be misused in illegal ways.
However, Choi drew a line when it came to institutionalizing virtual assets, adding, “Establishing a monitoring system and acknowledging institutionalization are different.”
He added, “Whether or not to institutionalize crypto assets will be thoroughly discussed at the Crypto Asset Committee, which will be established in November under the leadership of the Financial Services Commission.”
