South Korea plans to crack down on illegal crypto transactions across departments

Several South Korean financial institutions are planning to join forces to combat illegal activities involving cryptocurrencies such as Bitcoin (BTC).

Koo Yun-cheol, director of the government’s policy coordination office, said Monday that the inter-agency crackdown was in response to growing concerns about speculative investments and potential illegal activities during the crypto market’s ongoing boom.

“Special attention needs to be paid to illegal activities using virtual assets,” he said at a vice-ministerial meeting on crypto, according to local news agency Yonhap.

As part of a crackdown scheduled to last until June, the Financial Services Commission will require local financial institutions to step up monitoring of cryptocurrency withdrawals. Any suspicious activity should be reported to the country’s Financial Intelligence Unit, which is responsible for investigating financial crimes.

Other regulators, such as the Ministry of Finance and the Financial Supervisory Authority, also plan to keep a close eye on cross-border crypto transactions, the report noted.

South Korea has been facing strict regulation after the "Act on Reporting and Using Specific Financial Transaction Information" was officially implemented in late March 2021. According to the law, local cryptocurrency exchanges must maintain contact with local banks to ensure mandatory real-name account transactions. As reported in March, the National Tax Service of South Korea has been stepping up its efforts to combat tax evasion involving crypto.

New regulatory developments emerged in South Korea last week amid record highs in the crypto market, with Bitcoin surpassing $64,000 on Wednesday. Despite the record highs in cryptocurrency prices, South Korea's central bank governor Lee Chung-yeol believes that cryptocurrencies have "considerable limitations" as a payment method and warned that their volatile price swings pose a threat to financial stability.