According to local sources, South Korean citizens engaged in “illegal” cryptocurrency exchanges that totaled 5.6 trillion Korean won ($4.3 billion) in 2022. The government has been closely monitoring such transactions due to the recent tightening of licensing regulations.
On March 7th, the media reported on figures provided by the Korea Customs Service, which showed a significant increase in the amount of funds seized in economic crimes, rising from 3.2 trillion won ($2.5 billion) in 2021 to 8.2 trillion won ($6.2 billion) in the past year.
Almost 70% of all the illicit money traffic that was captured by the authorities involved cryptocurrency transactions. However, only 15 transactions accounted for the total intercepted digital assets of $4.3 billion. These transactions were focused on the purchase of foreign virtual assets with the intention to sell them within the country later. This is because the South Korean regulatory regime creates a price difference between local and foreign crypto assets, making foreign assets more expensive for customers.
According to reports in August 2022, Korean customs detained 16 people who were involved in illegal foreign exchange transactions related to cryptocurrency assets worth approximately $2 billion. Since 2017, entities involved in cryptocurrency transactions in Korea have been required to obtain regulatory approval from the Financial Services Commission under the Foreign Exchange Transactions Act. As a result, any attempts to participate in the global cryptocurrency trade, whether by foreign players entering the Korean market or domestic investors seeking better exchange rates abroad, are considered “illegal”.
In that same month, the Korea Financial Intelligence Unit reportedly took measures against 16 cryptocurrency firms based outside of Korea, which included KuCoin, Poloniex, and Phemex. These firms were accused of conducting business activities aimed at Korean consumers, such as providing Korean-language websites, organizing promotional events, and offering credit card payment options for cryptocurrency purchases. These activities are considered to be subject to the Financial Transactions Report Act.
