Korea Tightens Crypto Rules Amid Taxation Delay Debate

Korea's cryptocurrency regulatory framework is at a crossroads as rules tighten on one front while efforts are underway to delay taxation on investment gains.

The Financial Services Commission announced that an amendment approved by the Cabinet will extend the 'travel rule' for crypto transactions to cover all transfers, including those below 1 million won ($705).

This change removes the threshold to prevent users from splitting transactions into smaller amounts to evade the rule. The revised rules also tighten screening requirements for virtual asset service providers, requiring reviews of legal violations, financial health, and creditworthiness to extend to major shareholders.

A proposed bill aims to postpone the planned taxation of crypto investment gains by three years, reigniting debate over when such taxes should take effect. The tax is currently scheduled to take effect at the start of next year at a combined rate of 22 percent, including local income tax.