#SouthKoreaCryptoPolicy South Korea has developed a strong regulatory framework for crypto to promote transparency and protect investors. A key policy is the Virtual Asset User Protection Act (VAUPA), taking effect in July 2024. It requires exchanges and service providers to store at least 80% of user funds in cold wallets, implement strict AML/KYC procedures, and disclose their holdings. Violators face heavy penalties, including fines and even life imprisonment for crimes exceeding 5 billion KRW (~$3.8 million).

In 2025, South Korea will begin regulating cross-border crypto transactions, requiring companies to register and report activity to the Bank of Korea monthly. This aims to curb foreign exchange and crypto-related crimes.

The government is also preparing for a 20% tax on annual crypto profits over 50 million KRW, set to start in 2028. Corporate restrictions on crypto trading are being lifted gradually, with increased participation from institutions expected in 2025.

Authorities like the Financial Services Commission (FSC) and KoFIU are ramping up oversight, cracking down on non-compliant exchanges, and increasing enforcement efforts.

For users, best practices include using licensed exchanges, maintaining proper records for taxes, and following security protocols. South Korea’s policies aim to create a safer, more mature crypto environment while still encouraging innovation.