South Korea drops minimum threshold for crypto Travel Rule checks

The final approach is softer than one element of the March proposal. The earlier draft called for transfers of at least 10 million won involving overseas platforms or wallets to be reported to KoFIU regardless of their risk level. After industry objections, the Cabinet approved version instead requires providers to operate their own monitoring systems.

South Korea's zero-threshold approach will differ from the current U.S. model. FinCEN guidance says the U.S. Travel Rule generally applies to qualifying transmittals of $3,000 or more. South Korea will instead require information sharing for every covered domestic VASP transfer once its new rules become effective.

The change fits within wider international efforts to increase payment traceability. FATF's updated standards require virtual asset providers to obtain and retain originator and beneficiary information. Different thresholds across jurisdictions had been identified as a continuing challenge for exchanges operating internationally, as covered in earlier compliance reporting.

The new transfer requirements do not begin on Aug. 20. The FSC said the VASP registration provisions and rules concerning sanctions on former employees take effect on that date. The Travel Rule expansion and other transfer-related AML requirements will instead take effect six months after the decree is formally promulgated.

Existing VASPs also receive a one-year grace period for certain new requirements covering debt ratios, staffing, computer infrastructure and internal controls. The broader registration framework will allow regulators to examine financial soundness, senior management qualifications and major shareholders more closely.

The changes add another layer to South Korea's expanding oversight of cross-border crypto activity. Lawmakers had already moved to create registration requirements for businesses handling international virtual asset transfers.

For exchanges and users, the next date to watch is the decree's formal promulgation because that will start the six-month countdown for the new transfer rules. KoFIU also plans continued supervision of VASPs as firms update their systems to handle identity information on transfers that previously fell below the threshold.