Crypto Regulation Surge: South Korea's New Rules Take Shape

South Korea's recent election has resulted in significant regulatory changes to the cryptocurrency industry, with the government striving to balance innovation with investor protection and maintain stability in the market. From June 2025, the FSC will enforce more stringent regulations on nonprofits, exchanges and risky tokens including mandatory crypto donation conversion, trading restrictions and sales caps for exchanged funds, and the delisting of low-liquidity token exemptions. These actions seek to decrease speculative excess and increase market transparency.'".

VASPs are required to implement robust AML/KYC systems, including the implementation of strong security measures like real-name bank accounts and transaction data sharing with regulators, as per the FATF Travel Rule, which is being enforced by the government. Noncompliance can result in severe penalties. From 2025 onwards, a 20% tax will be levied on profits from crypto transactions exceeding $35,900 annually. Additionally, businesses engaged in cross-border crypto operations must file monthly reports with the Bank of Korea for registration and reporting.

On the whole, South Korea is moving towards a more balanced regulatory regime that seeks to promote innovation while minimizing risks such as money laundering and market manipulation, making it arguably one of the top crypto regulatory nations in Asia. Future legislation, such as the Digital Asset Basic Act (DABA), is projected to provide additional legal clarity, resulting in more sustainable adoption of digital currencies and attracting institutional and international investors to a safer, more stable market.