South Korea | Crypto

South Korea's financial watchdog imposed a $24.6 million fine on Bithumb and partial suspension that came into effect last month.

Prosecutors say Jeong Sang-ho’s “active deceptive acts” left nearly 2,800 investors frozen out of their funds, as South Korea's crackdown on the crypto industry widens. South Korean prosecutors have requested a 20-year prison sentence for the CEO of crypto deposit service Delio, calling the scale of alleged fraud against thousands of investors “massive.” During closing arguments at the Seoul Southern District Court on Thursday, prosecutors asked the court to sentence Jeong Sang-ho under the Act on Aggravated Punishment of Specific Economic Crimes, citing what they described as deliberate deception and false promotion that left nearly 2,800 victims without access to their funds, according to the Korean news agency Yonhap. “The defendant’s active deceptive acts and false promotion have resulted in numerous victims, and the scale of the damage is massive," prosecutors reportedly said, adding that Jeong was “exacerbating their suffering by evading responsibility and maintaining an uncooperative attitude.” Read mo...

Shinhan Card signed a deal with Solana Foundation to expand stablecoin payment tests and explore non-custodial wallets and DeFi-based services. One of South Korea’s largest credit card providers, Shinhan Card, signed a memorandum of understanding with the Solana Foundation to test stablecoin payment technology and explore the use of non-custodial wallets through a more advanced follow-on proof of concept (PoC).  Following a joint pilot project completed at the beginning of April, the new partnership will conduct a more “advanced” PoC to explore the commercial feasibility of stablecoin payments for merchants and customers seeking an improved payment experience, Shinhan Card announced on Thursday. The partnership will also explore developing a “hybrid financial model” that combines traditional finance (TradFi) and decentralized finance (DeFi) infrastructure. Read more

South Korea's tax authority is looking to build crypto transaction tracking software that can help track potential tax evaders. South Korea’s National Tax Service (NTS) has opened a tender for software licenses to track virtual asset transactions as part of tax evasion enforcement, according to a government procurement notice. The notice said the contract is for “virtual asset tax evasion response transaction-tracking software licenses,” with a budget of 146.5 million won (around $99,500), including value-added tax and delivery due within 30 days of contract signing. Bid submissions are scheduled for April 28 to April 30, with proposal evaluation set for May 7. The procurement notice itself gives limited detail on the software’s technical scope. However, citing an official from the NTS scientific investigation unit, local outlet ZDNet Korea reported that the software would allow officials to monitor crypto transactions in real time, visualize transfers between specific wallet addresses and exchanges, and supp...

The sandbox will test preset spending limits, timing controls and category restrictions for public sector expense payments. South Korea’s Ministry of Economy and Finance (MOEF) is preparing to test blockchain-based payments for certain government expenses under a regulatory sandbox exploring distributed ledger technology (DLT)-based financial infrastructure. The ministry said on Thursday that it selected a pilot project that will use tokenized deposits to execute government operational spending, with a full rollout targeting the fourth quarter of 2026. The program will initially launch in Sejong City and will test predefined spending conditions, including limits on timing and usage categories.  Tokenized deposits are digital representations of traditional bank deposits on blockchain or other DLT infrastructure. Unlike many stablecoins, they remain bank liabilities and are designed to operate within the existing financial system. Read more

Ripple and Kyobo Life are piloting tokenized government bond settlement as South Korea builds rules for token securities and digital asset payments. Ripple has partnered with Kyobo Life Insurance, one of South Korea’s largest life insurers, to pilot blockchain-based settlement of government bonds, as Seoul moves to formalize rules for tokenized securities. Ripple Custody, Ripple’s digital asset custody solution, will support the issuance, storage and settlement of tokenized government bonds, the company said in a Wednesday announcement. The companies will also explore tokenized treasury settlement across Korea’s financial system. The project aims to replace traditional bond settlement processes, which often rely on multiple intermediaries and two-day settlement cycles, with onchain execution that enables near real-time settlement. This change could reduce counterparty risk and improve capital efficiency. Read more

The collaboration aims to bring regulated custody and staking for JitoSOL to South Korea as institutions prepare for new crypto rules. Jito Foundation has signed a memorandum of understanding with Korean digital asset custodian KODA to explore institutional custody and staking support for JitoSOL in the local market.  According to Monday’s announcement, the agreement includes outreach to institutional investors and the development of compliant custody and staking pathways. It comes as South Korea’s Financial Services Commission is expected to finalize a digital asset regulatory framework later this year. Read more

South Korea’s FSS said API trading now makes up 30% of crypto turnover and warned it will crack down on abusive automated trading patterns, local media reported Monday. South Korea’s Financial Supervisory Service (FSS) said Monday that API-based trading now accounts for about 30% of crypto buy-and-sell turnover, warning that some traders are using automated tools to inflate volumes and manipulate prices. According to reports from Yonhap News Agency and Maeil Business Newspaper, the regulator warned that some traders are using automated tools to inflate volumes and manipulate prices, citing cases involving repeated small trades, spoofed orders and coordinated activity across multiple accounts.  The FSS said it will launch targeted investigations into accounts suspected of using APIs for excessive or abnormal trading patterns, signaling closer scrutiny of automated trading activity in the market.  Read more

The decision closes a legal battle spanning more than a year, after Dunamu moved to overturn the sanction and halt its enforcement. A South Korean court has canceled the Financial Intelligence Unit’s (FIU) three-month partial business suspension of Dunamu, the operator of crypto exchange Upbit, according to local reports. Yonhap News Agency reported on Tuesday that the Seoul Administrative Court sided with Dunamu in its lawsuit against the FIU, overturning the sanction tied to alleged Anti-Money Laundering (AML) violations.  The court said clear rules existed for transactions above 1 million won (about $675), but found that regulations for smaller transfers were not specific enough, weakening the basis for enforcement within the case.  Read more

The Financial Services Commission said inconsistent exemption rules created loopholes that allowed funds to move quickly with minimal account history. South Korea’s financial regulator said it will tighten the exception rules under crypto exchanges’ withdrawal-delay system after finding that scam-linked accounts granted exemptions accounted for most voice-phishing-related losses.  The Financial Services Commission (FSC) said Wednesday that the strengthened framework, developed with the Financial Supervisory Service (FSS) and the Digital Asset eXchange Alliance (DAXA), will impose unified standards on when users can bypass withdrawal delays.  The regulator said exchanges had been applying their own exception criteria with no clear minimum standard, creating loopholes that let bad actors quickly move funds if they meet easy requirements such as account age or trading history.  Read more

The draft proposal from South Korea’s ruling party reportedly bars stablecoin interest and calls for technical standards to ensure interoperability across blockchain networks. South Korea’s ruling Democratic Party is reportedly preparing a draft bill that would classify stablecoins as foreign exchange payment instruments and require tokenized real-world assets (RWAs) to be backed by assets held in trust.  Citing an integrated draft of the proposed Digital Asset Basic Act, the Seoul Economic Daily reported on Wednesday that stablecoins used in cross-border transactions would be treated as “means of payment” under the Foreign Exchange Transactions Act, placing related businesses under oversight even without separate registration. The draft bill would also require issuers of tokenized RWAs to place underlying assets in managed trusts under the Capital Markets Act.  Read more

An inspection found slow reconciliation cycles and weak trade-halting systems across major crypto exchanges. South Korea has ordered all crypto exchanges to reconcile their internal ledgers with actual asset holdings every five minutes after an inspection uncovered weaknesses in internal controls. The directive was announced on Monday by the Financial Services Commission (FSC) after a meeting with top crypto exchanges and the Digital Asset Exchange Alliance (DAXA), during which they discussed the findings of an emergency inspection triggered by the Bithumb payout incident. The inspection found that three of the country’s five major exchanges were reconciling balances only once every 24 hours, limiting their ability to respond quickly to discrepancies. Systems designed to halt trading during major mismatches were also found to be insufficient, raising concerns about how exchanges would handle large-scale errors. Read more

South Korea’s tax agency is seeking a private custodian for seized crypto after a wallet seed phrase leak exposed government-held assets. South Korea’s National Tax Service (NTS) is moving to select a private custody provider for seized crypto assets after a February press release exposed a wallet recovery phrase and triggered the unauthorized transfer of confiscated tokens. On Feb. 26, the NTS accidentally exposed a crypto wallet seed phrase in an official press release, resulting in the unauthorized transfer of crypto tokens valued at about $4.8 million. The release included an image of a Ledger cold wallet and a sheet of paper showing the mnemonic phrase without being blurred.  Citing people familiar with the matter, ZDNet Korea reported that the agency is reviewing a plan to outsource custody of confiscated crypto and is drafting selection criteria for providers. The NTS is reportedly aiming to select a provider within the first half of 2026.  Read more

The ruling Democratic Party responded, saying it has not formed a consensus on abolishing the tax but will review the new proposal. South Korea’s main opposition party has proposed scrapping a planned crypto tax ahead of its 2027 rollout, citing fairness, double taxation and enforcement concerns. According to a Thursday report by local media outlet eDaily, the conservative People Power Party (PPP) introduced a bill to amend the country’s Income Tax Act and remove provisions on digital asset income, aiming to abolish a planned tax on crypto asset gains ahead of its 2027 implementation. Under the upcoming rules, crypto gains exceeding 2.5 million Korean won will be subject to a 20% income tax and an additional 2% local tax starting on Jan. 1, 2027. The measure has already been delayed three times since its initial introduction.  Read more

Regulators found 6.65 million AML violations at Bithumb, including 45,772 crypto transfers involving 18 unregistered overseas VASPs. South Korea has fined crypto exchange Bithumb 36.8 billion won (about $24.5 million) and imposed a six-month partial business suspension after finding widespread violations of Anti-Money Laundering (AML) rules, according to a Yonhap News Agency report.  According to Yonhap, regulators identified about 6.65 million violations during an AML inspection, including failures related to customer identity verification, transaction restrictions and record-keeping requirements. Authorities found Bithumb facilitated 45,772 crypto transfers involving 18 unregistered overseas virtual asset service providers (VASPs), in violation of South Korea’s AML rules.  The Financial Intelligence Unit (FIU) under the Financial Services Commission (FSC) reportedly decided on the penalties following a sanctions deliberation committee meeting reviewing the exchange’s compliance with the Act on Reporting and...

Hana Financial Group will collaborate with Standard Chartered on digital assets following its stablecoin partnership with USDC issuer Circle earlier in March. Hana Financial Group, one of South Korea’s largest financial conglomerates, has partnered with Standard Chartered on finance and digital assets. On Sunday, Hana Financial said it signed a business agreement with the United Kingdom’s Standard Chartered Group (SC Group) for cooperation in global financial business and digital asset fields, Yonhap News reported. The agreement covers collaboration in various global financial sectors, including investment banking, money markets, foreign exchange and digital assets. Read more

The National Tax Service has opened a procurement bid for a platform to analyze crypto trading data and flag potential tax evasion. South Korea’s tax authority is preparing to deploy artificial intelligence to track cryptocurrency investment gains as the government moves closer to implementing a long-delayed tax on digital assets. According to a report by The Korea Times on Thursday, South Korea’s tax authority has opened a bid to build an AI-backed system to analyze cryptocurrency transaction data, as the government prepares for its planned 2027 tax on digital asset gains. The project, valued at about 3 billion Korean won (around $2 million), will establish an integrated platform capable of processing large volumes of crypto trading data. The Korea Times reported that the NTS plans to use AI and machine learning to identify unusual transaction types and patterns and detect possible tax evasion. Read more

South Korea's move to suspend Bithumb over AML failures turns a local compliance case into a market-structure story. Enforcement against the country's second-largest exchange threatens to reroute retail flows, deepen venue concentration, and degrade one of crypto's most-watched regional pricing signals: the kimchi premium. Compliance case hits market plumbing The Korea Financial Intelligence Unit sent […] The post Why Bitcoin’s kimchi premium is on life support after South Korea targets crypto exchange appeared first on CryptoSlate.

Authorities sold the recovered Bitcoin in small batches over 11 days to avoid disrupting the market, according to local media reports. South Korean prosecutors have sold 320.8 Bitcoin recovered after a phishing incident temporarily removed the crypto from government custody. The Gwangju District Prosecutors’ Office said it sold 320.8 Bitcoin (BTC) at market prices and transferred 31.59 billion Korean won (about $21.5 million) to the national treasury, The Chosun Ilbo reported Tuesday. Authorities reportedly sold the Bitcoin in small batches over 11 days between Feb. 24 and March 6 to avoid disrupting the market. Read more

Crypto exchange Bithumb risks a partial business suspension for negligence around money laundering and customer verification practices, according to local media reports. Bithumb, South Korea’s second-largest cryptocurrency exchange by trading volume, is reportedly facing a possible partial business suspension of up to six months as regulators step up enforcement over anti-money laundering controls. South Korea’s Financial Intelligence Unit (FIU) gave Bithumb a preliminary notice of a six-month partial suspension over alleged anti-money laundering and know-your-customer failures under the Act on Reporting and Using Specified Financial Transaction Information, according to local media reports on Monday. The regulator reportedly cited concerns over dealings with unregistered overseas virtual asset service providers and shortcomings in customer due diligence. The FIU also issued a reprimand warning to Bithumb’s CEO, a warning considered a heavy penalty, which may lead to restrictions on his reappointment or futur...