South Korea Cracks Down on Crypto Offshore Flows with App Restrictions and Transfer Checks

South Korea has introduced new rules to restrict access to offshore cryptocurrency platforms and tighten transfer checks in an effort to curb capital outflows. The measures aim to reduce the flow of crypto assets from domestic exchanges, which have seen significant amounts of stablecoin outflows in recent months.

The government is restricting app distribution by removing unregistered derivatives platforms from Google Play, including Bybit, MEXC, and HTX. However, users can still access these platforms through web interfaces or iOS listings, giving registered domestic exchanges a competitive edge.

Exchanges are also required to seek users' names, transfer purposes, and information on the origin of transferred funds for transfers above 10 million won ($7,000). These measures will be monitored closely to assess their effectiveness in reducing net outflows, which have reached about 14.9 trillion won from January 2025.

The Korea Institute of Finance has recommended against multiple bank partnerships for crypto exchanges, citing concerns over transaction oversight and competition. Instead, the institute proposes a phased model where exchanges work with several banks, while individual users choose only one bank for trading activities.