South Korea Tightens Crypto Rules: New Shareholder Scrutiny and Travel Rule

The South Korean government is significantly intensifying its oversight of the digital asset sector through a revised enforcement decree of the Act on Reporting and Using Specified Financial Transaction Information. According to reports from local media outlet Edaily, the Financial Intelligence Unit (FIU) announced that the State Council has passed these amendments to bolster market integrity and consumer protection. The updated regulatory framework introduces more rigorous qualification checks for exchange stakeholders and removes the previous minimum threshold for the Travel Rule, marking a shift toward comprehensive monitoring of all cryptographic transfers.

Stricter Operational Standards for Virtual Asset Service Providers

A primary focus of the new legislation is the financial health and governance of Virtual Asset Service Providers (VASPs). Regulatory authorities will now conduct much more stringent reviews regarding the qualifications of major shareholders of exchanges to prevent illicit actors from entering the industry. Furthermore, exchanges are now mandated to maintain a debt-to-asset ratio not exceeding 200% to ensure fiscal stability. To support these operational requirements, the decree specifies that platforms must be equipped with:

• Required professional personnel specializing in compliance and security.
• Adequate physical equipment and technological infrastructure.
• Robust internal control systems to mitigate risks of money laundering and fraud.

Global Compliance and the Removal of Travel Rule Thresholds

In a major departure from previous policy, the Travel Rule—which requires the collection of sender and recipient data—will no longer be limited to transactions exceeding 1 million Korean won. Instead, all transfers will be subject to reporting requirements regardless of the amount. The FIU will also implement differentiated controls based on the assessed risk levels of transactions involving offshore exchanges and unhosted (personal) wallets. This move aligns South Korea more closely with the Financial Action Task Force (FATF) recommendations to eliminate regulatory blind spots in the cross-border movement of digital assets like Bitcoin (BTC) and Ethereum (ETH).

The rollout of these regulations follows a structured timeline to allow the industry to adapt. Provisions regarding shareholder scrutiny and operational standards will begin to take effect from August 20, 2026. Existing exchanges will be granted a one-year grace period to bring their internal systems into compliance with the new staffing and equipment mandates. However, the updated Travel Rule provisions, removing the 1 million won floor, are scheduled for official implementation six months after the initial decree takes effect, providing a transition window for technical integration.