Reports from local media outlets indicate that South Korea's Ministry of Justice and Ministry of Security and Public Administration are collaborating to elevate their cryptocurrency crime investigation unit to a permanent department. The move involves discussions on crucial aspects like budget allocation and prosecutor appointments, slated to take place early next month. Currently, the unit operates under interim status, tethered to the Seoul Southern District Prosecutor’s Office, leaving it susceptible to disbandment at the government's discretion.
Established in July, the investigation team comprises approximately 30 experts and oversees the coordination of activities among seven government agencies, including the Prosecutor's Office, the Financial Supervisory Authority, the Financial Intelligence Unit (FIU), and the National Tax Service. With plans for permanence, the unit aims to engage with domestic and international counterparts on an equal footing, anticipating a surge in caseloads following the enactment of the Virtual Asset User Protection Act on July 19. This legislation introduces severe penalties, including life imprisonment, for cryptocurrency-related offenses involving amounts exceeding 5 billion won ($3.6 million).
The intensification of law enforcement actions against virtual asset-related crimes is evident in the rising number of reported suspicious transactions and suspected cryptocurrency-related offenses. In 2023, the count of suspicious transactions soared to 16,076, marking a substantial 48.8% increase year-over-year, with reports of suspected cryptocurrency-related crimes to law enforcement surging by 90%. In response, South Korea is implementing various measures to uphold order in its cryptocurrency market, including tightening listing rules for tokens on local exchanges and bolstering scrutiny of non-compliant exchanges, with plans to shutter those flouting Financial Action Task Force norms.
Cryptocurrency's prominence in South Korea extends beyond law enforcement to political realms, with major political parties pledging to ease restrictions in anticipation of this year's parliamentary elections. Notably, the government, led by President Yoon Suk Yeol, deferred the implementation of a 20% tax on cryptocurrency capital gains from 2023 to 2025 upon assuming office in 2022, while concurrently augmenting taxes on cryptocurrencies.
