South Korea proposes crypto Travel Rule

South Korea’s Financial Services Commission proposed changes on March 30 to tighten anti-money laundering rules for crypto businesses, adding to a broader overhaul of how virtual-asset transfers are monitored. The package would expand existing Travel Rule obligations for domestic transfers and, according to industry comments reported by Yonhap and other outlets, require exchanges to treat some cross-border transfers of 10 million won or more as suspicious transactions by default. The proposal has drawn opposition from the country’s largest exchanges, including Upbit and Bithumb, through their industry group. Public comments closed on May 11, and the rules are expected to be finalized after further review in July. ### Which South Korean rule is actually being changed? The Financial Services Commission said on March 30 that it proposed revisions to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information and related subordinate regulations. The agency said the package would tighten registration requirements for virtual asset service providers, or VASPs, and strengthen their anti-money laundering duties. (fsc.go.kr) The FSC said the current Travel Rule for domestic transfers between South Korean VASPs applies at 1 million won or more and would be expanded to transfers below that amount. The proposal also makes the receiving exchange responsible for securing the information provided by the sender. ### Where does the 10 million won figure come from? The 10 million won threshold relates to a separate part of the proposed AML tightening focused on overseas-linked virtual-asset transfers, according to industry comments reported by Yonhap and cited by Cointelegraph and other outlets. (fsc.go.kr) Under that proposal, domestic VASPs handling transfers with overseas VASPs would have to report transactions of 10 million won or more as suspicious regardless of additional risk indicators. A KoFIU task force launched on Dec. 29 said it was seeking broader AML upgrades to respond more effectively to transborder crime and prepare for a Financial Action Task Force mutual evaluation scheduled for 2028. That task force also said it would draw up AML improvement measures in the first half of 2026. ### Why are Upbit, Bithumb and other exchanges objecting? DAXA, the industry body representing 27 registered VASPs including Upbit, Bithumb, Coinone, Korbit and Gopax, said the proposal would create a reporting burden that exchanges could not process in practice. (cointelegraph.com) According to the group’s comments as reported by Yonhap, suspicious transaction reports at the five largest exchanges could rise 85-fold, from about 63,000 last year to more than 5.4 million annually. (fsc.go.kr) The same industry comments also objected to a requirement to verify the accuracy of customer information, arguing that lower-level rules were adding obligations not clearly stated in the underlying law. That complaint goes directly to onboarding and compliance operations, because customer-identification checks sit at the center of AML screening and transfer approvals. (cointelegraph.com) ### How does this fit into South Korea’s wider crypto crackdown? South Korea’s regulators have been moving on several fronts at once. The FSC’s March 30 proposal paired AML changes with tighter entry rules for VASPs, including financial-soundness tests, shareholder scrutiny and internal-control requirements. The dispute also comes while major exchanges are already in court over earlier AML sanctions. Cointelegraph, citing Yonhap, reported that Upbit operator Dunamu won a first-instance ruling on April 9 canceling a three-month partial business suspension, though the regulator appealed on April 30, and that Bithumb later obtained a court suspension of a separate six-month partial business suspension pending its main case. (cointelegraph.com) (fsc.go.kr) ### What happens next, and when? May 11 was the deadline for public comments on the FSC proposal, according to reports citing the regulatory notice. Industry submissions from DAXA are now part of that review record. July is the next date to watch. Reports citing the proposal said South Korean authorities are expected to complete regulatory and legal review then, which would determine whether the 10 million won suspicious-transfer requirement and the broader Travel Rule changes move into final form for exchanges including Upbit and Bithumb. (cointelegraph.com)