South Korea's New Financial Regulation Trend: Small Cryptocurrency Transactions Also Subject to Real-Name Tracking

South Korea’s financial sector is pushing forward with an important regulatory upgrade—expanding identity verification rules for cryptocurrency transactions to smaller transaction amounts. In the past, this system, known in the industry as the “Travel Rule,” only regulated large transactions exceeding 1 million KRW. Now, South Korea has decided to significantly lower the threshold, aiming to intercept smaller suspicious fund flows.

Background of the Regulatory Framework Adjustment

The core reason for this policy adjustment is the deepening of anti-money laundering efforts. The Financial Intelligence Unit (FIU) of South Korea recently organized a special working group to re-examine the relevant provisions of the Act on Reporting and Using Certain Financial Transaction Information. Through this process, authorities plan to establish more detailed compliance standards for Virtual Asset Service Providers (VASPs) and improve preventive measures for innovative products such as stablecoins.

Three Key Highlights of the Policy Adjustment

Lowering the Tracking Threshold: Extending the scope of real-name verification from 1 million KRW to smaller amounts, meaning more daily transactions will come under regulatory scrutiny.

VASP Compliance Upgrades: South Korea requires all virtual asset platforms to further standardize identity verification processes, ensuring each transaction has a traceable real-name record.

Stablecoin-Specific Controls: Given the high liquidity and cross-border features of stablecoins, South Korea has formulated specialized regulatory measures to prevent these assets from becoming tools for arbitrage and money laundering.

Market Impact and Outlook

This policy will have a dual effect on South Korea’s crypto ecosystem. On one hand, compliant platforms and users will face higher scrutiny costs; on the other hand, the deepening regulation will strengthen the health and international recognition of South Korea’s crypto market. For exchanges aiming to enter the South Korean market, this means investing more resources into anti-money laundering systems and user identity verification.

Overall, South Korea’s regulatory move reflects the global demand for greater transparency in cryptocurrency transactions and signals that stricter compliance standards will become the new normal for industry development.