New Era of Regulation
South Korea has emerged as a leading country in the global crypto space, but with rising concerns over investor protection and financial crimes, the government is stepping up its regulatory framework. The new crypto policy aims to strike a balance between innovation and oversight.
Under the updated rules, all crypto exchanges must register with the Financial Services Commission (FSC) and comply with stringent anti-money laundering (AML) and Know Your Customer (KYC) guidelines. Failure to comply can lead to heavy penalties or shutdowns.
One of the most significant developments is the implementation of the Virtual Asset User Protection Act, which enforces custody standards, internal controls, and mandatory insurance policies to safeguard user funds. Additionally, the Korean government is monitoring stablecoins and decentralized finance (DeFi) platforms more closely.
The policy also includes tax reforms, where crypto gains over a certain threshold will be taxable—delayed previously due to public pushback.
As South Korea builds a safer crypto environment, it sends a strong message to other nations: regulation and innovation can coexist. This is a crucial moment for investors, developers, and exchanges to align with the new compliance landscape.