South Korea Weighs Fintech Role in Crypto Transfers

South Korea is preparing to implement a new regulatory framework in December that will bring cross-border cryptocurrency transfers under formal foreign exchange oversight, with authorities actively considering whether to open the system to fintech companies beyond traditional crypto exchanges. The move aims to close regulatory gaps that officials say have been exploited for money laundering and illicit foreign exchange activity.

The initiative follows amendments to the Foreign Exchange Transactions Act, which received cabinet approval and were promulgated on June 2. The revised law includes a six-month grace period, setting the stage for the new system to take effect in December. Under the framework, international transfers involving virtual assets will be classified as regulated foreign exchange activities. Companies wishing to offer such services must register with the Ministry of Economy and Finance and report all overseas transfer transactions through the Bank of Korea's official reporting network.

A significant aspect of the ongoing regulatory development is the potential inclusion of fintech firms. Currently, only registered Virtual Asset Service Providers (VASPs), such as...