According to a report from the South Korean Tax Agency, there are a total of 1,432 individuals who own cryptocurrencies, with a total value of up to $99 billion USD. This amount accounts for 70.2% of the total foreign assets reported by individuals and businesses in South Korea.
In particular, the total amount of reported foreign assets (including cash and securities) has surged to a new high of 186.4 trillion won (approximately $140 billion USD), compared to 64 trillion won in 2022. This significant increase poses challenges for regulatory authorities.
Earlier this year, the South Korean tax authorities announced plans to enhance monitoring of individuals who do not report their foreign assets. In June 2023, South Korean lawmakers officially passed a bill aimed at ensuring greater safety for cryptocurrency investors. This new law includes 19 provisions related to cryptocurrencies, granting the Financial Services Commission (FSC) and the Bank of Korea the authority to supervise entities operating in the field, as well as custodial organizations. It also allows regulatory agencies to enforce penalties for fraudulent activities in cryptocurrency asset transactions.
Starting from January 2024, South Korea will require companies that issue or own cryptocurrencies to “disclose” details of the amount of crypto assets held in financial reports to comply with new accounting standards, as announced in draft regulations published by the country’s Financial Services Commission (FSC) in July 2023.
Additionally, to address growing concerns about the potential misuse of cryptocurrencies for illegal activities such as money laundering, South Korea’s regulatory agencies have increased investigations into cryptocurrency transactions conducted over-the-counter (OTC).
Ki No-Seong, Deputy Prosecutor of the Financial Services Commission, emphasized the need for comprehensive regulations governing OTC cryptocurrency transactions.
As an illustrative example, regulatory authorities mentioned the case of three individuals arrested last year in South Korea. These individuals were caught red-handed engaging in illegal transactions of 94 billion won worth of cryptocurrencies valued at $70.9 million USD through OTC transactions.
South Korea is known for its strict regulations on cryptocurrencies and has implemented various measures to combat cryptocurrency-related criminal activities. However, these actions also send positive signals to the cryptocurrency industry in South Korea, as they demonstrate that the government places importance on protecting investors and developing a clear legal framework for cryptocurrencies.