South Korea Ends Mandatory Reporting for Crypto Transfers Above 10 Million Won

6 mins mins

South Korea’s Financial Services Commission has clarified that a proposed rule requiring crypto exchanges to report transfers above 10 million won to the Financial Intelligence Unit is still under review, not yet finalized. The proposal, which would apply to transactions involving overseas virtual asset businesses or personal wallets, drew sharp objections from the country’s largest exchanges, which warned the measure could increase annual suspicious transaction reports from roughly 63,000 to over 5.4 million.

South Korea Ends Mandatory Reporting for Crypto Transfers Above 10 Million Won

What the Proposed 10 Million Won Reporting Rule Would Require

On March 30, 2026, the FSC published a draft amendment to the enforcement decree of South Korea’s Special Act on virtual assets. The draft would abolish the existing 1 million won threshold for travel-rule information sharing, meaning exchanges would need to collect and transmit sender and receiver details on all transfers regardless of size.

The same draft introduced new AML obligations for domestic virtual asset businesses when transacting with overseas platforms and personal wallets. Under the disputed provision, exchanges would be required to file suspicious transaction reports (STRs) for any transfer above 10 million won involving a foreign virtual asset business or a personal wallet, regardless of whether the exchange had independent grounds to suspect wrongdoing.

Proposed reporting trigger

10 million won

Industry coverage said transfers above this threshold would be reported regardless of risk level under the disputed proposal.

The public comment period for the draft ran from March 30 to May 11, 2026. During that window, industry groups mounted a coordinated pushback against the reporting provision.

Exchanges Warn of an 85-Fold Surge in Suspicious Transaction Reports

The Digital Asset Exchange Alliance (DAXA), representing South Korea’s five largest crypto exchanges, argued that existing law already requires suspicious transaction reports only when firms have reasonable grounds to suspect wrongdoing. DAXA said the proposed lower-level rules would effectively create a new, blanket reporting duty that bypassed that standard.

The operational burden would be enormous. Exchanges estimated that annual STR filings across the five major platforms could jump from 63,408 to 5,445,133, an increase of roughly 85 times. That volume would strain compliance teams and could overwhelm the FIU’s own processing capacity, potentially burying genuinely suspicious activity under millions of routine filings.

Projected annual STR filings

5,445,133

Reported exchange estimates put the annual suspicious-report total far above the current baseline if the draft obligation were implemented.

DAXA’s core objection centered on a structural issue: the proposal would shift risk-judgment responsibilities from the FIU to exchanges themselves. Rather than flagging transactions based on their own risk assessments, exchanges would be forced to report mechanically based on a threshold, effectively turning compliance departments into data-entry operations. The debate echoes similar tensions in other markets, where regulators are weighing how much responsibility to place on platforms, as seen in recent warnings from CME Group’s CEO about U.S. crypto product oversight.

FSC Says the Rule Is Still Under Review

On June 1, 2026, the FSC issued a clarification responding to media reports that had claimed the 10 million won reporting clause had already been dropped from the amendment. The FSC stated that the FIU is still reviewing reasonable alternatives for the proposed duty, but did not confirm a final withdrawal.

This distinction matters. Some media coverage framed the development as a completed rollback, but the official statement leaves the door open for a revised version of the reporting requirement to appear in the final decree. The regulatory process is ongoing, not settled.

Meanwhile, the broader amendment package remains in play. Even if the 10 million won STR trigger is removed or modified, the draft’s elimination of the 1 million won travel-rule threshold would still represent a significant expansion of data-collection obligations for Korean exchanges handling cross-border transfers.

What This Means for Exchanges and Traders

If the final rule drops the blanket reporting trigger but retains the expanded travel-rule requirements, exchanges would face a mixed outcome. They would avoid the massive STR filing burden but would still need to collect and transmit identity information on a far larger share of transactions, including those below the current 1 million won floor.

For traders, the practical impact depends on which provisions survive. The travel-rule expansion would mean more identity verification steps for cross-border transfers of any size. If some form of the reporting requirement persists in modified form, transfers involving overseas platforms or personal wallets could face additional compliance friction. The outcome could also influence how exchanges manage funding rate dynamics and trading infrastructure on Korean platforms.

South Korea’s crypto exchanges have operated under AML obligations since March 25, 2021, with travel-rule supervision phased in starting March 25, 2022. The current amendment cycle represents the most significant proposed tightening of those rules since their introduction, arriving at a time when blockchain analytics firms like Chainalysis are also tracking how crypto payment channels are expanding across new sectors.

FAQ

Has South Korea officially removed the 10 million won reporting requirement?

No. The FSC’s June 1, 2026 statement confirmed that the FIU is reviewing alternatives for the proposed rule, but no final decision has been published. Media reports characterizing the provision as already dropped are premature based on the available official record.

Who would be affected by the proposed reporting rule?

Domestic virtual asset businesses in South Korea, primarily crypto exchanges registered under the Special Act. The reporting obligation would apply specifically to transfers involving overseas virtual asset platforms or personal wallets.

Will Korean exchanges still monitor large crypto transfers?

Yes. Regardless of whether the 10 million won STR trigger survives, Korean exchanges remain subject to existing AML obligations that require suspicious transaction reporting based on reasonable grounds. The draft amendment’s travel-rule expansion would also require identity-data collection on all transfers, removing the current 1 million won minimum threshold.

Does ending mandatory threshold-based reporting mean looser regulation?

Not necessarily. Removing a blanket reporting trigger while expanding travel-rule data collection could shift oversight from volume-based filing to more targeted, risk-based monitoring. The net effect on regulatory stringency depends on which provisions make it into the final decree and how exchanges implement their internal controls.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.