South Korea to Crack Down on Crypto Transfers Under 1 Million Won – New Rules Coming

South Korea’s Financial Services Commission (FSC) is advancing plans to expand the crypto **Travel Rule**—requiring virtual asset service providers (VASPs) to collect and share sender/recipient information—to cover all transactions, including those under **1 million won** (~$680–$700). Announced in late November 2025 by FSC Chairman Lee Eok-won, this move closes a loophole exploited for “smurfing,” where illicit funds are split into smaller amounts to evade identity checks.

Key Details
– Currently, the Travel Rule applies mainly to transfers over 1 million won.
– The expansion targets rising misuse: Korea’s Financial Intelligence Unit (FIU) flagged over 36,000 suspicious crypto transactions in the first eight months of 2025 alone.
– VASPs will need to verify names, wallet addresses, and other details for even low-value transfers.
– Legislative amendments are expected in the first half of 2026, with implementation likely following.

Reasons for the Crackdown
Regulators cite increasing money laundering, tax evasion, drug trafficking, and illicit overseas remittances via crypto. This aligns with global FATF standards and builds on prior measures like the Virtual Asset User Protection Act (2024).

mpact on Market
– Exchanges face higher compliance costs for system upgrades and monitoring.
– Retail traders may experience delays or added verification for small transfers.
– Broader reforms include blocking “high-risk” offshore platforms and preemptive FIU account freezes.

The proposed extension signals South Korea’s commitment to robust AML oversight in its vibrant crypto market. While enhancing transparency and investor protection, it may raise operational burdens. Final rules await National Assembly approval in 2026.