South Korea is further advancing mandatory registration and foreign exchange declaration systems for cryptocurrency transfers, with the new regulations coming into effect on December 3, 2026.

South Korea's revised Foreign Exchange Act will come into effect on December 3, introducing registration requirements for cross-border cryptocurrency transfers. The proposed rules cover transfers between cryptocurrency exchanges and private wallets, and require reporting to South Korean banks.

According to a legislative announcement by the Korean Ministry of Strategy and Finance on October 7th, the proposed regulations will bring cross-border virtual asset transfers under a formal monitoring system, which includes transactions between exchanges and private wallets. The government is currently accepting public opinions until October 26th, after which the implementation requirements will be finalized.

At the same time, this adjustment stems from the amendments to the "Foreign Exchange Transactions Act" passed by the National Assembly on May 7th and announced on June 2nd. The amendments established a new category for "registered virtual asset transfer services," which covers some services that transfer cryptocurrencies between the Korean market and overseas markets.

Korean law firms Bae, Kim & Lee explained in a legal analysis on October 19 that the draft executive order covers transfers between domestic and foreign virtual asset service providers. Transactions between exchanges and private, non-hosted wallets are also included, as authorities believe that such transactions may have similar cross-border impacts.

According to the draft, eligible operators must register with the Ministry of Strategy and Finance after fulfilling their existing obligations regarding the declaration of virtual assets. Enterprises are also required to connect their systems to the foreign exchange information network of the Bank of Korea and to keep relevant transfer records.

Registration requirements include having a suitable computer system, as well as at least two qualified employees for each business location. These employees must have two years of experience in foreign exchange or have completed training recognized by the government.

Unlike certain types of foreign exchange transactions, virtual asset transfer services do not require meeting separate minimum capital requirements under the draft regulations.

Will USDT and USDC become official payment tools?

Claims circulating on social media suggest that these changes mean South Korea will officially recognize stablecoins pegged to the US dollar, such as Tether's USDT and Circle's USDC, as payment tools.

Cryptocurrency analyst Ash Crypto welcomed this so-called progress, stating that it would be a major step forward for the adoption of stablecoins in South Korea. He posted on X that starting from December 3rd, South Korea will recognize cryptocurrency stablecoins as an official form of payment, and called this development "absolutely great news" for the US dollar-pegged stablecoins in one of Asia's largest cryptocurrency markets.

However, the official announcement from the Planning and Finance Ministry describes a registration and reporting framework for virtual asset transfer services. The explanations released so far do not reclassify USDT or USDC as legally recognized payment tools as a whole.

When stablecoin transfers involve activities covered by the revised laws, they may be brought under the new monitoring framework. However, this does not automatically grant any stablecoin a status for domestic payments, nor does it lift existing foreign exchange transaction restrictions.

This difference is related to the South Korean won stablecoin roadmap announced in July, which set separate plans for digital currency legislation and foreign exchange reform. The government has been studying how won-backed tokens can operate within the financial system, but these proposals are still different from the transfer registration requirements of December.

Upbit and Bithumb face new reporting obligations

If the operations of cryptocurrency exchanges such as Upbit and Bithumb comply with the definition of virtual asset transfer services, then the proposed framework may have an impact on them.

Registered operators are required to submit transaction information to the foreign exchange information system of the Bank of Korea. This information may subsequently be shared with the National Tax Service, the Korean Customs Service, the Financial Services Commission, and the Financial Intelligence Unit of Korea.

The Financial Services Commission will be granted the authority to impose certain regulatory measures and penalties, while the Financial Supervision Agency will be responsible for conducting inspections.

South Korea has previously considered expanding the licensing for encrypted transfers from exchanges to other fintech companies. The scope of application of the draft also includes custody, brokerage, and related transfer services, depending on how each company operates.

Monitoring requirements may affect the transfers of US dollar stablecoins traded on Korean exchanges. However, the government has not yet announced any separate USDT trading restrictions, new taxes on stablecoin transfers, or specific restrictions on exchange premiums regarding this decree.

South Korea strengthens regulation on overseas cryptocurrency transfers

The Planning and Finance Ministry stated that the reporting system will help authorities identify unauthorized foreign exchange transactions and attempts to circumvent existing regulations. The proposal also includes increasing penalties for certain foreign exchange transactions involving illegal remittances, voice phishing, or unauthorized trade payments.

The draft stipulates that registration can be revoked after the first violation of the conditions. The maximum administrative fine, which was originally a four-month suspension of operations, will be increased to 100% of the profits obtained from the violation.

Meanwhile, Korean exchange operator Dunamu has been exploring international stablecoin payments with MoonPay. The agreement reached by both parties on October 21st involved potential cross-border financial services and corporate transactions, but no actual payment products have been established in operation yet.

After the public comment period ends on October 26, the draft must still undergo regulatory and legislative review before being submitted to the cabinet for consideration. The government expects that the final provisions will be implemented in conjunction with the revised law that takes effect on December 3, while transitional arrangements for certain existing remittance and exchange services will allow them to meet the new requirements by June 30, 2027.