AN OVERVIEW OF CRYPTOCURRENCY REGULATIONS IN SOUTH KOREA

Last updated: June 20, 2025, 01:37 | Written by: Cathie Wood

South Korea, a nation renowned for its technological prowess and early adoption of innovation, has emerged as a significant player in the global cryptocurrency landscape.But navigating the world of digital assets can feel like traversing a complex maze, especially when regulations are involved. We will discuss the crypto currency laws and regulations in South Korea in this blog. This blog will give you the best answer to all your questions about the laws and South Korea's crypto tax and regulations. This article clearly explained how cryptocurrency is taxed, cryptocurrency laws and legal regulations in South Korea and more.The good news?While intricate, South Korea's approach to cryptocurrency regulations is designed to foster a safe and transparent environment for both investors and businesses.This article provides a comprehensive overview of these regulations, delving into the key players, legal frameworks, and future trends that are shaping the country's crypto ecosystem. The Current State of South Korea s Economy . Source: James St. John South Korea is a high-income nation with a mixed economy. The country has seen remarkable economic growth, with its GDP increasing by an average of 5.7% annually since 2025.We will explore how South Korea's proactive approach, particularly in investor protection and anti-money laundering (AML), influences the global regulatory landscape. Here's my new Cointelegraph article An overview of cryptocurrency regulations in South Korea . 👀 Might be worth checking out, even if you can't be bothered with legal stuff. Why? cryptocurrecy regulations in South Korea have gotten somewhatThis robust framework seeks to balance innovation with safeguarding participants.Whether you're a seasoned crypto trader, a curious observer, or a foreign national looking to enter the South Korean market, this guide will equip you with the knowledge you need to understand the rules of the game.

The Regulatory Landscape: Key Players and Legislation

Understanding the main regulatory bodies is crucial to comprehending cryptocurrency regulations in South Korea. A global approach is needed to maximize the advantages from the underlying technology and to manage the risks, the paper says. However, given the different stages of market maturity, the development of regional hubs and the varying capacity of regulators, it is prudent to holistically focus also on the important role that international organizations and national/regional regulators asThree main entities are responsible for overseeing the crypto market:

The Financial Services Commission (FSC): The FSC is the primary regulatory body, responsible for setting policies and supervising financial institutions, including cryptocurrency exchanges.
The Financial Supervisory Service (FSS): The FSS executes the FSC's policies, conducting on-site inspections and ensuring compliance with regulations.
The Korea Financial Intelligence Unit (KoFIU): The KoFIU focuses on anti-money laundering (AML) and combating the financing of terrorism (CFT), monitoring cryptocurrency transactions for suspicious activities.

These bodies work in concert to create a regulatory framework that aims to achieve transparency, security, and compliance within the cryptocurrency market ecosystem.The South Korean government recognizes the potential of blockchain technology and is committed to fostering innovation while mitigating risks.

The Virtual Asset User Protection Act

A landmark piece of legislation, the Virtual Asset User Protection Act, passed in June 2024 and implemented in July 2025, consolidates 19 crypto-related bills into a single, comprehensive framework.This act officially legalizes cryptocurrency in South Korea and mandates specific compliance measures for virtual asset service providers (VASPs), including crypto exchanges.

Key aspects of the Virtual Asset User Protection Act include:

Investor Protection: The Act focuses on protecting investors from market manipulation, insider trading, and other fraudulent activities.
Cold Wallet Storage: Cryptocurrency exchanges are required to store at least 80% of user funds in cold wallets to protect against hacking and theft.
Liability for Damages: The Act establishes liability for damages caused by illegal activities, providing a legal recourse for investors who suffer losses.
Enhanced Monitoring: The Act enhances the monitoring of cryptocurrency transactions to detect and prevent money laundering and other illicit activities.

Legality of Cryptocurrency Trading in South Korea

Cryptocurrency trading is fully legal in South Korea. Cryptocurrency trading is fully legal in South Korea, and the country is home to some of the world s largest crypto exchanges, such as Upbit, Bithumb, and Coinone. These exchanges are required to register with the FSC and implement stringent security measures to protect user funds.The country is home to some of the world's largest and most active crypto exchanges, including Upbit, Bithumb, and Coinone. This article aims to understand the trends in South Korea's virtual asset regulations in 2025 by introducing the background, contents of the legislation, and the current status of each of the three aforementioned regulations.These exchanges play a vital role in the South Korean crypto market, providing platforms for trading various digital assets.

Registration and Security Requirements for Exchanges

To operate legally in South Korea, cryptocurrency exchanges must register with the FSC and meet stringent security requirements. South Korea has established a structured framework for taxing cryptocurrency transactions. Key points revolve around a 20% tax on crypto gains and new regulations introduced by the Digital Asset Basic Act (DABA). Understanding the 20% Tax on Crypto Gains. South Korea imposes a 20% tax on capital gains from cryptocurrency transactions.These requirements are designed to protect user funds and prevent financial crimes. South Korea's Robust Cryptocurrency Regulations: A Comprehensive Overview. South Korea's proactive approach to regulating cryptocurrency exchanges, driven by the Act on Reporting and Use of Specific Financial Transaction Information, is reshaping the global crypto landscape. This article analyzes the key aspects of this regulatory framework andSpecific measures include:

Real-Name Verification: Exchanges must implement real-name verification systems to identify users and prevent anonymous trading, making sure all transactions are tied to a real verified person.
Information Security Management System (ISMS) Certification: Exchanges must obtain ISMS certification to demonstrate their ability to protect user data and prevent cyberattacks.
Segregation of Funds: Exchanges must segregate user funds from their own operating capital to prevent misuse of funds.
Reporting Suspicious Activities: Exchanges are required to report any suspicious transactions to the KoFIU to combat money laundering and other financial crimes.

Purchasing Cryptocurrency: A Step-by-Step Guide

Purchasing cryptocurrency in South Korea involves a straightforward process, but it's essential to follow the necessary steps to ensure compliance with local regulations. South Korea - Implementation of the Crypto Regulation Next Phase According to local media, the initial regulatory measures introduced in July 2025 were largely focused on investor protection. Key requirements included cryptocurrency exchanges storing at least 80% of user funds in cold wallets, ensuring these assets are protected from potentialHere’s a basic guide:

Choose a Registered Exchange: Select a reputable cryptocurrency exchange that is registered with the FSC and complies with all applicable regulations.Upbit, Bithumb, and Coinone are popular choices. Purchasing cryptocurrency in South Korea involves a straightforward process, but it s essential to follow the necessary steps to ensure compliance with local regulations. We recommend using Bybit for its user-friendly interface, competitive fees, and support for the Korean won (KRW).Bybit is also a strong option for its user-friendly interface and support for Korean Won.
Create an Account: Register for an account on the chosen exchange and complete the necessary verification process, including providing personal information and verifying your identity.This typically involves submitting a copy of your ID and proof of address.
Link Your Bank Account: Link your bank account to your exchange account to deposit funds for trading.Many exchanges require you to use a bank account under your own name for verification purposes.
Deposit Funds: Deposit Korean Won (KRW) into your exchange account. An overview of South Korea's cryptocurrency regulations in 2025, detailing regulatory developments, tax considerations, mining practices, and historical events shaping the country's crypto landscape.The specific methods for depositing funds may vary depending on the exchange.
Purchase Cryptocurrency: Once your funds are deposited, you can purchase the desired cryptocurrency using KRW.The exchange will provide a trading interface where you can place buy orders.
Secure Your Cryptocurrency: After purchasing cryptocurrency, it's essential to secure your assets by storing them in a secure wallet, such as a hardware wallet or a software wallet with strong security features.

Cryptocurrency Taxation in South Korea

Understanding the tax implications of cryptocurrency trading is crucial for individuals and businesses in South Korea.The South Korean government has established a structured framework for taxing cryptocurrency transactions.

The 20% Tax on Crypto Gains

South Korea imposes a 20% tax on capital gains from cryptocurrency transactions exceeding a certain threshold.This tax applies to profits generated from trading, selling, or transferring cryptocurrencies.

Key points regarding cryptocurrency taxation in South Korea:

Tax Threshold: As of 2025, crypto gains exceeding 2.5 million Korean won (approximately $1,900 USD) are subject to the 20% tax.
Tax Reporting: Taxpayers are required to report their cryptocurrency gains and losses on their annual income tax returns.
Calculation of Gains: Capital gains are calculated as the difference between the purchase price and the sale price of the cryptocurrency, minus any allowable deductions.
Foreign Nationals: Foreign nationals trading cryptocurrency in South Korea are subject to the same tax regulations as residents. Future Crypto Regulations in South Korea. South Korea s planned cryptocurrency taxation, which was originally scheduled to take effect in January 2025, has been postponed to a future date. The country is also aiming to further align its cryptocurrency regulations with the anti-money laundering guidelines set forth by the FATF. ChinaIf their crypto gains exceed the 2.5 million KRW threshold, they will also be taxed at 20%.

Adapting Tax Policies to the Changing Landscape

The South Korean government is continually adapting its cryptocurrency tax policies to reflect the evolving nature of the digital asset market. It is shaping how countries around the globe regulate digital money. The U.S. has made various laws to handle the challenges digital currencies bring. These laws aim to keep innovation going while protecting consumers. Overview of U.S. Crypto Laws. In the U.S, the approach to cryptocurrency regulations has changed a lot.This includes considering factors such as:

Decentralized Finance (DeFi): The government is exploring how to tax DeFi activities, such as staking and yield farming.
Non-Fungible Tokens (NFTs): The tax treatment of NFTs is still under development, with the government considering various approaches.
International Cooperation: South Korea is collaborating with other countries to develop a consistent approach to cryptocurrency taxation.

Regulations for Foreign Nationals Trading Cryptocurrency

Foreign nationals trading cryptocurrency in South Korea are generally subject to the same regulations as residents. The main regulatory bodies overseeing cryptocurrency in South Korea are the Financial Services Commission (FSC), the Financial Supervisory Service (FSS), and the Korea Financial Intelligence Unit (KoFIU).This includes the requirement to register with a licensed exchange, verify their identity, and comply with all applicable tax laws.As stated earlier, if their crypto gains exceed the 2.5 million KRW threshold, they will also be taxed at 20%.

Specific Considerations for Foreign Nationals

While the general regulations are the same, foreign nationals should be aware of the following specific considerations:

Visa Requirements: Foreign nationals must have a valid visa to reside and trade cryptocurrency in South Korea legally.
Bank Account Requirements: Foreign nationals typically need to open a bank account in South Korea to deposit and withdraw funds from cryptocurrency exchanges.This can require additional documentation and may be subject to specific banking regulations.
Language Barriers: Many cryptocurrency exchanges in South Korea primarily operate in Korean. The transparent nature of blockchain technology makes cryptocurrency transactions traceable. Individuals and businesses must consider the tax implications of holding and trading cryptocurrencies in South Korea. 4. How does South Korea adapt its cryptocurrency tax policies to the changing landscape? The South Korean government isForeign nationals may need to use translation tools or seek assistance from bilingual staff to navigate the trading platforms.
Tax Residency: Determining tax residency is important for accurately reporting and paying taxes on cryptocurrency gains. Here's my new Cointelegraph article An overview of cryptocurrency regulations in South Korea . 👀 Might be worth checking out, even if you can't be bothered with legal stuff. Why? cryptocurrecy regulations in South Korea have gotten somewhat more strict since the Terra/LUNA collapse and FTX saga. That means that whether you choose toForeign nationals should consult with a tax professional to determine their tax obligations in South Korea.

Future Trends in South Korea's Virtual Asset Regulations (2025 and Beyond)

South Korea's regulatory approach to cryptocurrencies is constantly evolving.Looking ahead, several key trends are expected to shape the future of virtual asset regulations in the country.We can expect the continued efforts to align its crypto regulations with international standards, especially those set forth by the Financial Action Task Force (FATF) for anti-money laundering.

Alignment with FATF Guidelines

South Korea is committed to aligning its cryptocurrency regulations with the anti-money laundering guidelines set forth by the FATF.This includes implementing measures to identify and prevent the use of cryptocurrencies for illicit activities.

Specific areas of alignment include:

Travel Rule: Implementing the FATF's Travel Rule, which requires VASPs to collect and transmit information about the originator and beneficiary of cryptocurrency transfers.
Risk-Based Approach: Adopting a risk-based approach to regulating cryptocurrency activities, focusing on the areas with the highest risk of money laundering and terrorist financing.
International Cooperation: Collaborating with other countries to share information and coordinate regulatory efforts.

The Digital Asset Basic Act (DABA)

While the Virtual Asset User Protection Act focuses on investor protection, the proposed Digital Asset Basic Act (DABA) aims to provide a more comprehensive regulatory framework for the entire cryptocurrency industry. Cryptocurrencies in South Korea aren't just legal, they're regulated. Embracing crypto 39;s potential, the government safeguards its use with precise AML amp; Cointelegraph en LinkedIn: An overview of cryptocurrency regulations in South KoreaThe DABA is expected to address a wider range of issues, including:

Licensing of VASPs: Establishing a clear licensing regime for VASPs, including cryptocurrency exchanges, custody providers, and other service providers.
Issuance of Digital Assets: Regulating the issuance of digital assets, including initial coin offerings (ICOs) and security token offerings (STOs).
DeFi Regulation: Developing a regulatory framework for decentralized finance (DeFi) activities.
Consumer Protection: Strengthening consumer protection measures, including requirements for clear and transparent disclosures.

Focus on Investor Protection

Even with the development of new regulations, investor protection will likely remain a top priority for South Korean regulators. What are the regulations for foreign nationals trading cryptocurrency in South Korea? Foreign nationals trading cryptocurrency in South Korea are subject to the same tax regulations as residents. Starting in 2025, their crypto gains exceeding 2.5 million Korean won will also be taxed at 20%.This includes:

Enhanced Due Diligence: Requiring VASPs to conduct enhanced due diligence on their customers to prevent fraud and other illicit activities.
Market Surveillance: Strengthening market surveillance to detect and prevent market manipulation and insider trading.
Investor Education: Providing investor education programs to help investors understand the risks and opportunities associated with cryptocurrencies.

South Korea's Proactive Approach: Shaping the Global Crypto Landscape

South Korea's proactive approach to regulating cryptocurrency exchanges, driven by the Act on Reporting and Use of Specific Financial Transaction Information and the Virtual Asset User Protection Act, is reshaping the global crypto landscape.The country's stringent regulations and focus on user protection have influenced other countries to adopt similar measures.Other nations have begun to create laws addressing the problems that digital currencies cause, with the aim of encouraging innovation while protecting consumers.

By setting a high bar for regulatory compliance, South Korea is fostering a more transparent and secure cryptocurrency ecosystem. South Korea s crypto market and government regulations Global overview Premium Statistic Search interest for cryptocurrency South Korea 2025, by typeThis, in turn, is helping to attract institutional investors and promote the long-term growth of the digital asset market. Overview of South Korea s New Crypto Rules. On, South Korea s Financial Services Commission (FSC) announced stringent new regulations impacting the sale of cryptocurrencies by NGOs and virtual asset exchanges starting in June.It is also seen as essential for wider adoption of cryptocurrencies, as greater regulation means more trust for the average person.

Conclusion

Navigating the cryptocurrency regulations in South Korea can seem daunting, but understanding the key players, legislation, and future trends is essential for anyone involved in the country's digital asset market.From the FSC and KoFIU ensuring oversight, to the Virtual Asset User Protection Act safeguarding investors, South Korea has implemented a comprehensive framework. South Korea: Stringent Regulations and User Protection South Korea has a rigorous approach to crypto regulations. The Financial Services Commission (FSC) is responsible for overseeing cryptocurrency activities, and exchanges must register with the Korea Financial Intelligence Unit (KFIU).By prioritizing investor protection, anti-money laundering, and alignment with international standards, South Korea is shaping the global regulatory landscape and fostering a more mature and sustainable cryptocurrency ecosystem. Learn about the current state of cryptocurrency regulations in South Korea, including the government s stance and laws affecting the cryptocurrency market.Keep in mind the 20% tax on crypto gains above 2.5 million KRW for both residents and foreign nationals.As the digital asset market continues to evolve, staying informed about the latest regulatory developments is crucial for navigating this dynamic landscape successfully.Remember to consult with legal and tax professionals to ensure compliance with all applicable regulations. In June South Korea has passed its landmark Virtual Asset User Protection Act, which integrates 19 crypto-related bills, aimed at protecting investors from the risks associated with cryptocurrencies. This note provides an overview of the current state of cryptocurrency regulations in South Korea, as well as the country's adoption of cryptocurrencies.Consider leveraging user-friendly platforms like Bybit for your trading needs.As South Korea's economy grows, its cryptocurrency laws and regulations are likely to only become more influential globally.