South Korea Develops Crypto Monitoring System to Combat Financial Crime

South Korea Deputy Prime Minister and Minister of Economy and Finance, Choi Sang-mok, announced on Thursday in Washington, D.C. the establishment of a virtual asset transaction monitoring system.

This initiative aims to ensure the integrity of transactions, particularly in light of rising concerns over cross-border transactions involving stablecoins like Tether. The announcement was made during Choi’s attendance at the G20 Finance Ministers’ Meeting.

Choi underscored the need for such a system due to a troubling increase in illegal foreign exchange activities, including corporate tax evasion and money laundering linked to digital assets.

“We will push for mandatory reporting of stablecoins traded across borders,” he emphasized, highlighting the urgency of the situation. Stablecoins, such as Tether (USDT) and USD Coin (USDC), are gaining traction due to their stable value and efficiency in remittances, but their rising use has raised red flags for regulators.

Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok (second from the right) speaks during a meeting with Korean journalists in Washington, D.C., on Oct. 24 (local time). (The Ministry of Economy and Finance) Source: Business Korea

One of the primary challenges identified by Choi is the absence of a foundational law governing virtual assets in South Korea. He stated, “Since a basic law on virtual assets has not yet been established, it is unclear whether stablecoins traded across borders should be viewed as a means of payment or as capital transactions.” To address this regulatory gap, the government plans to amend the Foreign Exchange Transactions Act, providing a clearer framework for the classification of virtual assets.

South Korea Regulatory Framework for Virtual Assets: Monitoring, Classification, and Economic Insights

Under the proposed amendments, virtual assets will be classified as a “third type,” distinct from foreign exchange and capital transactions. This classification will require virtual asset service providers engaged in cross-border transactions to register in advance and report their activities monthly to the Bank of Korea. The information gathered will be shared with various governmental agencies, including the National Tax Service and the Financial Intelligence Unit, to monitor suspicious transactions and conduct thorough analyses.

Additionally, Choi announced that discussions would commence next month within the newly established Virtual Assets Committee, which will operate under the Financial Services Commission. This committee aims to explore the institutionalization of virtual assets for trade and capital transactions.

Addressing concerns regarding the weakening South Korean won, which recently approached the 1,400 won mark against the dollar, Choi attributed the currency’s fluctuation to external geopolitical factors, rather than fundamental issues within the Korean economy. He stated, “Exchange rates can vary in the short term depending on a country’s macro policies and circumstances.” Choi further explained the complexities surrounding currency valuation, citing the yen’s prolonged weakness despite Japan’s economic competitiveness.

Choi also hinted at potential revisions to this year’s economic growth forecast. Following the Bank of Korea’s announcement of a mere 0.1% growth rate for the third quarter, he noted, “Downside risks to the growth rate have increased, but we need to monitor the situation further.” He reassured that revenue forecasts would primarily rely on corporate income taxes and capital gains from real estate transactions, indicating limited uncertainty in this area.

Lastly, Choi commented on the ongoing challenges faced by Samsung Electronics, viewing the situation as a critical moment for the company and the broader Korean industry. “The crisis of Samsung Electronics signifies a crisis for Korean industry, which has a dual aspect,” he remarked, suggesting that confronting these challenges could pave the way for future growth.

Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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