Well, folks, it seems South Korea’s got itself into a pickle with these digital doodads they call cryptocurrencies. As the number of crypto investors swelled past the 10 million mark-give or take a few-a lawmaker from the ruling party decided it was high time to take a closer gander at the goings-on.
Suspicious Activity Reports Hit Record High
On Monday, Jin Sung-joon, a lawmaker with the Democratic Party of Korea (DPK) and a member of the National Assembly’s Planning and Finance Committee, wagged a stern finger at the crypto industry. He warned that these digital assets could be ripe for exploitation as their adoption grows faster than a weed in good dirt.
“Stablecoins,” he declared, “are being used more and more for payments and settlements in the real economy. But mark my words, they’re also ripe for misuse in foreign exchange crimes like illegal currency exchanges.”
Jin shared some juicy tidbits from the Financial Intelligence Unit (FIU), revealing that the number of suspicious transaction reports (STRs) from local virtual asset service providers (VASPs) has nearly doubled this year. Between January and August, they’ve racked up a whopping 36,684 cases-more than the combined total of the previous two years. 🤯
And that’s not all. The number of cases from the first eight months of 2025 represents an 86% increase from 2024’s total. Back in 2021, there were a mere 199 cases, but by 2022, that number had ballooned to 10,797. Fast forward to 2023 and 2024, and the FIU recorded 16,076 and 19,658 STR cases, respectively. It’s like watching a pot boil over-except the pot’s full of crypto chaos.
For context, domestic VASPs are required to report any fishy transactions to the FIU under the Specific Financial Information Act. And if they want to do business in South Korea-like storing, brokering, or managing crypto assets-they’ve gotta register as a VASP with the FIU. 🏦
Earlier this year, the financial authority discovered that several well-known overseas crypto exchanges-BitMEX, KuCoin, CoinW, Bitunix, and KCEX-hadn’t bothered to register as VASPs. As a result, 17 crypto apps were blocked in March. Oops. 😬
According to Korea Customs Service (KCS) data cited by Jin, the value of crypto-related crimes referred to prosecutors hit a staggering 9.5 trillion won (that’s $7.1 billion for you folks across the pond) between January 2021 and August 2025. And get this-90% of those crimes involved illegal cross-border remittances facilitated by unlicensed channels. 🕵️♂️
South Korea’s Crypto Oversight
Authorities have also confirmed cases where stablecoins were used in illegal transactions. Jin stressed that all relevant agencies need to roll up their sleeves and work together to tackle these newfangled crimes and develop a system to prevent them.
“Relevant agencies, including the Customs Service and the FIU, must implement effective crackdowns-like tracking criminal funds and blocking disguised transfers-while also developing systematic countermeasures against these new types of foreign exchange crimes.”
Meanwhile, the Financial Services Commission (FSC) has been busy drafting digital assets legislation and shifting its regulatory approach over the past year. The financial authority plans to release a framework for the issuance and distribution of won-backed stablecoins next month. Stay tuned, folks. 🍿
As the stablecoin sector gains traction worldwide, South Korean lawmakers have been scrambling to establish the necessary legislation. Multiple bills have been introduced in the National Assembly this year, including two rival bills in July from Korea’s ruling and opposition parties. 🥊
The banking sector, not to be outdone, has reportedly been in talks with Tether and Circle to discuss potential partnerships. They’ve been exploring various legalization scenarios over the past few months. And just ahead of the highly anticipated regulatory framework, digital asset custody firm BDACS officially launched the first South Korean won-backed stablecoin, KRW1, on the Avalanche blockchain. 🚀
In collaboration with Woori Bank-one of the four largest domestic financial institutions in the country-the crypto custodian plans to utilize the won-pegged stablecoin as a “low-cost payment and settlement system for public-sector programs” and build the “backbone of the digital asset market.” Sounds fancy, doesn’t it? 💎
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2025-09-23 09:15