South Korean authorities announced their plan to fully regulate cross-border crypto transactions by the end of 2025 to combat a “blind spot” enabling tax evasion by foreign exchanges.
Koran Authorities To Regulate Cross-Border Crypto Transactions
According to local news media outlet Edaily, South Korea’s Deputy Prime Minister (DPM) Choi Sang-mok shared the country’s plan to regulate cross-border crypto transactions at a Group of 20 (G20) meeting in Washington.
Choi revealed that the Korean government plans to create a legal basis for authorities overseeing foreign exchanges to monitor these transactions and share them with the pertinent financial authorities.
Starting next year, Korean authorities will create new definitions of “virtual assets” and virtual asset operators” in the Foreign Transaction Act. These definitions will “define virtual assets as a ‘third type’ that is not included in foreign exchange, external payment instruments, or capital transactions,” Choi explained on Thursday.
As a result, crypto deposits and withdrawals made by foreign operators, customers, and personal wallets will be defined as a “cross-border crypto transaction.” Additionally, companies that handle cross-border transactions involving crypto assets must register with Korean financial authorities and report transaction details to the Bank of Korea monthly.
Choi noted the information collected would also be shared with the National Tax Service, Korea Customs Service, financial authorities, and international financial centers to monitor illegal transactions for statistics, analysis, and research.
Korea’s Increasing Demand For Cross-Border Transactions
At the G20 meeting, the South Korean DPM explained that the new regulatory plan comes amid an increase in cross-border crypto transactions. Choi revealed that the recent surge is due to stablecoins popularity, as it can be used for cross-border transactions and payments “just like real foreign exchanges.”
However, the high demand for cross-border transactions using crypto assets can’t be verified and regulated as there’s no legal basis for crypto assets in the Foreign Exchange Transactions Act.
Recently, stablecoin listings have been increasing on domestic exchanges, and the daily trading volume has already exceeded 300 billion won this year, up from 191 billion won last year. Cross-border transactions involving virtual assets are increasing, but their legal nature has not yet been agreed upon.
This created a “blind spot” that allegedly has been exploited for illegal activities, hiding criminal proceeds, and tax evasion. Per the report, the National Tax Service and Korea Customs Service rely on case-by-case requests or seizure warrants to obtain information about cross-border crypto transactions.
The South Korean Economy and Finance Ministry plans to conclude the revision of the Foreign Exchange Transactions Act and related laws in the first half of next year. Authorities reportedly expect to officially implement the monitoring system by the second half of 2025.
“Whether or not to formally incorporate virtual assets into the system, such as using them as a trading instrument for trade or capital transactions other than the monitoring system, will be discussed at the ‘Virtual Asset Committee’ to be launched next month under the leadership of the Financial Services Commission, and the ministry will also participate,” Choi closed.
Total crypto market capitalization is at $2.27 trillion in the weekly chart. Source: TOTAL on TradingView
Featured Image from Unsplash.com, Chart from TradingView.com
Credit: Source link
