According to local sources, South Korean residents transacted 5.6 trillion Korean won ($4.3 billion) using ‘illegal’ crypto exchanges in 2022. The country’s authorities have been especially watchful of such money movement as the licencing regime tightens. The data released by the Korea Customs Service were reported in the local media on March 7. According to Customs, the total amount of cash seized in economic crimes climbed dramatically in the previous year, from 3.2 trillion won in 2021 to 8.2 trillion won ($6.2 billion)
In August 2022, Korean Customs reported arresting 16 individuals for illicit foreign exchange operations involving crypto assets valued at around $2 billion. The regulatory authorities claimed that the exchanges conducted business without being registered and threatened to levy penalties and prison terms as a result. In the same month, they also regulated 16 virtual asset service providers in the country, including KuCoin, Poloniex, and Phemex.
According to the Korea Financial Intelligence Unit (FIU), all 16 exchanges had allegedly engaged in business activities aimed at domestic consumers, such as offering Korean-language websites, holding promotional events aimed at Korean consumers, and accepting credit cards for cryptocurrency purchases. All of these activities are governed by the Financial Transactions Report Act.
Korea’s Foreign Exchange Transactions Act, which went into effect in 2017, requires companies engaging in crypto transactions to obtain regulatory clearance from the Financial Services Commission. Thus, the attempts to engage in the global crypto trade, both from the side of foreign players coming to the Korean market or domestic investors seeking a better exchange course outside, are described as illegal.
Crypto transactions accounted for over 70% of all illegal money flow intercepted by the authorities. The whole quantity of intercepted digital assets ($4.3 billion) is based on only 15 transactions. The transactions involved the purchase of international virtual assets with the goal of eventually selling them in the country, as the South Korean regulatory environment isolates the local market and raises the cost of foreign crypto for clients.
The country’s National Assembly is also considering numerous pieces of legislation that might have an influence on the cryptocurrency and blockchain industries. Legislation with a balanced approach to blockchain growth, investor protection, and market stability is being developed. South Korea’s President Yoon Suk-yeol, who took office in May, has made moves to create a more crypto-friendly regulatory climate in the midst of a market collapse.
