South Korean Regulator Eases Proposed Crypto Reporting Rules Targeting Large Transfers

South Korean financial authorities have reportedly amended their proposed changes to the Specific Financial Information Act (SFIA), easing the reporting rules that targeted large crypto transactions.

In March, the regulator proposed amendments to the Specific Financial Information Act, which is South Korea’s primary legal and regulatory framework governing digital assets, cryptocurrencies, and Anti-Money Laundering (AML).

The amendments initially required domestic operators to report crypto transfers exceeding 10 million Korean won, worth about $6,400, as suspicious transactions when involving overseas platforms or private wallets, regardless of assessed risk.

According to local reports, the financial authority reached this decision after meeting with crypto exchange representatives earlier this week to gather industry feedback on the proposed amendments to the SFIA.

In addition, DAXA affirmed that the rules would make compliance nearly impossible, noting that suspicious transaction reports from South Korea’s five largest exchanges could surge from about 63,408 cases last year to 5,445,133 under the proposal, a massive jump that would be hard to manage in daily operations.

The stricter customer due diligence rules included in the amendment are likely to be eased, the Friday report highlighted. The original draft mandated enhanced customer due diligence for crypto transactions classified as high-risk or suspicious, including verification of the source of funds and the purpose of the transaction.

Now, companies will only be required to conduct enhanced customer due diligence for transactions deemed particularly high-risk. Regulators will also allow a one-year “grace period” for the debt-to-equity ratio requirement in virtual asset business registration, easing the original rule for small businesses that may struggle to meet the 200% threshold.