South Korea’s crypto players launch strong opposition to stringent AML reporting regime

South Korea’s 27 registered crypto operators filed a joint objection on April 29 against proposed anti-money-laundering rules.

The proposed rules would force them to report every transaction above 10 million won (roughly $7,000) to the country’s Financial Intelligence Unit.

Exchanges reject proposed anti-money-laundering rules

The Digital Asset Exchange Alliance (DAXA), which represents the five major Korean exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax, along with 22 smaller licensed operators, submitted a formal objection to the proposed anti-money laundering rules through the Korea Legislation Research Institute’s public comment portal.

South Korea’s primary anti-money laundering (AML) law, the Specific Financial Information Act, currently requires crypto operators to file suspicious transaction reports (STRs) with the Financial Intelligence Unit (FIU) only when they have reasonable grounds to suspect illicit activity.

The amendment would treat all transactions above 10 million won (about $6,800) as inherently suspicious.

DAXA estimates the change would increase the big five exchanges’ STR filings from 63,408 last year to nearly 5.5 million, an 85 times increase.

The proposed rules also introduce a new rule that forces crypto operators to verify the accuracy of customer identification data. DAXA argued that adding a separate “verification” layer is going beyond what the current law requires.

Under the proposed rules, if a crypto exchange fails to follow customer verification rules, it could face a full business suspension. But for traditional banks or other financial firms, the same violation usually just results in a fine.

Cryptopolitan has previously reported on the unique regulatory pressure that the crypto industry faces. Earlier this year, the opposition People Power Party’s floor leader Song Eon-seok made a similar argument on when taxes were imposed on crypto gains. He told exchange executives that taxing crypto gains while having abolished the equivalent tax on stock investments amounts to unfair treatment.

South Korea’s tightening regulatory environment 

South Korea’s regulators are also intensifying their oversight of the Korean crypto markets. Cryptopolitan reported that the Financial Services Commission (FSC) imposed new real-time monitoring requirements on major exchanges following Bithumb’s accidental payout of 620,000 Bitcoins instead of 620,000 won in February. Exchanges must now balance their internal ledgers with actual holdings every five minutes, rather than every 24 hours. 

The FIU has also imposed a six-month partial business suspension and a 36.8 billion won ($24.6 million) fine on Bithumb for roughly 6.65 million AML violations. The suspension was later paused by a Seoul court after the exchange filed an injunction. 

Upbit’s operator, Dunamu, won a similar court challenge, getting its three-month suspension vacated. Coinone is now contesting its own sanctions.

The public comment period for the proposed AML rules ends on May 11. After that, the amendments will be reviewed by the Regulatory Reform Committee and the Ministry of Government Legislation.

The government is currently targeting a final cabinet vote in July. If passed, some parts of the law would take effect as soon as August 20, 2026, while others would be phased in starting in early 2027.