South Korea plans to increase the oversight of cryptocurrency cross-border transactions as part of counter tax-evasion measures.
According to local Korean news outlet Edaily, South Korea’s finance minister Choi Sang-Mok announced the incoming oversight increase at a G20 meeting in Washington. The lawmaker said that the country will introduce a reporting mandate for any business involved in cross-border crypto transactions. He said:
“We will promote preemptive monitoring of virtual asset transactions that are used for tax evasion and currency manipulation across borders.”
The new rules
Under the new rules, any South Korean business that manages cross-border cryptocurrency transactions must register with local regulators and report all the details of such transactions to the Bank of Korea monthly.
Choi recognized that crypto transactions currently constitute a blind spot for South Korea’s tax and customs services, which the country is now addressing. Tax evaders and criminals could exploit the current case-by-case enforcement to conceal their transactions.
The Korea Customs Service reported that crypto was involved in 81% of foreign exchange crimes. The local foreign exchange crime is estimated to be worth about $1.2 billion since 2020. Before the rules can be implemented, the local lawmakers must establish the necessary groundwork:
“We will establish new definitions of ‘virtual assets’ and ‘virtual asset business operators’ in the Foreign Exchange Transactions Act, and with this separate definition, we will define virtual assets as a ‘third type’ that is not included in foreign exchange, external payment means, or capital transactions.”
Choi expects the local authorities to conclude the legal revisions within the first half of 2025. The new reporting mandates would then be implemented before the second quarter’s end.
The news follows recent reports that cryptocurrency worth $890,000 was seized from the wallets of people who have failed to pay local taxes in a South Korean province. This followed a North Gyeongsang campaign that aimed to collect local tax arrears.
