South Korea Ditches Travel Rule Threshold for Crypto Transfers
Vexoda Newsroom
South Korea has removed the 1 million won threshold for its crypto Travel Rule, applying information-sharing requirements to all transfers between registered VASPs. This move aims to prevent users fro
In a significant regulatory update, South Korea's Cabinet approved amendments that will remove the existing 1 million won threshold for its crypto Travel Rule. Under these changes, information-sharing requirements now apply to all transfers between registered virtual asset service providers (VASPs), regardless of their value.
The Financial Intelligence Unit cited an instance where a user attempted to bypass regulations by making multiple small transactions after depositing over 200 million won into a crypto exchange and then withdrawing smaller amounts. This prompted the decision to eliminate the threshold, ensuring that all transfers are subject to scrutiny.
Beyond modifying the Travel Rule, South Korean authorities have also introduced new Anti-Money Laundering (AML) requirements for transactions involving overseas exchanges and personal wallets. Local VASPs must assess risk levels before allowing certain types of transfers; high-risk counterparties will face restrictions on their activities.
The amended decree takes effect six months after its promulgation, with existing providers given a year to comply with new financial, staffing, infrastructure, and internal control requirements. This move underscores South Korea's commitment to tightening crypto regulations in response to increased money laundering risks associated with overseas exchanges and personal wallets.
Market analysts predict that this change could have broader implications for global cryptocurrency trading practices, potentially setting a precedent for other jurisdictions. Traders should monitor how these new rules impact cross-border transactions and the overall regulatory landscape of digital assets.
Going forward, traders should be aware of the enhanced scrutiny on high-risk transfers and prepare to adapt their strategies accordingly. The expanded Travel Rule could lead to increased transaction costs or delays as platforms implement more stringent verification processes.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.