South Korea announced plans to expand its cryptocurrency travel rule to cover all transactions under 1 million won, approximately $680.
Financial Services Commission Chairman Lee Eok-won disclosed the regulatory expansion during the country's Anti-Money Laundering Day event.
The move eliminates a threshold that previously allowed users to bypass identity verification requirements through "smurfing."
Smurfing involves splitting larger transactions into smaller amounts to avoid detection.
What Happened
The Korea Financial Intelligence Unit has established a task force to revise the Act on Reporting and Using Specified Financial Transaction Information.
Virtual asset service providers will be required to collect and share sender and recipient information for all cryptocurrency transfers regardless of size.
South Korea's FIU reported 36,684 suspicious transaction reports between January and August 2025.
This figure surpasses the combined totals from 2023 and 2024.
The Korea Customs Service data shows 9.56 trillion won, equivalent to $7.1 billion, in cryptocurrency-linked crimes referred to prosecutors from 2021 through August 2025.
Approximately 90% of these cases involved "hwanchigi," illegal foreign remittance schemes using digital assets to bypass capital controls.
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Why It Matters
The regulatory expansion aligns South Korea with Financial Action Task Force standards for anti-money laundering oversight.
Authorities identified systematic exploitation of small-value transactions to evade existing controls tied to tax evasion, drug trafficking, and cross-border movement of illicit funds.
The task force is considering additional enforcement mechanisms including account suspension systems to freeze assets suspected of criminal activity before investigations conclude.
Legislative submission is expected in the first half of 2026, with implementation following formal approval.
Major exchanges including Upbit and Bithumb will face increased compliance costs as they implement enhanced monitoring and reporting systems for all transaction sizes.
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