Concerns are growing among virtual asset exchanges and the banking sector over the proposed amendments to the Enforcement Decree and supervisory regulations of the Act on Reporting and Using Specified Financial Transaction Information (the Special Act) being pushed by the financial authorities. If a plan to unconditionally report transfers of 10 million won or more as suspicious transactions goes into effect, both exchanges and banks could face major disruptions to their operations. The timing for implementing phase two of the "road map for corporate participation in the virtual asset market," which had long been adrift, is also being pushed down the priority list by the Special Act amendments.
According to the financial sector on the 27th, the Financial Intelligence Unit (FIU) under the Financial Services Commission has recently completed a public comment process on the proposed amendments to the Special Act's Enforcement Decree and supervisory regulations. However, both exchanges and banks reportedly expressed concern, saying, "If the amendments are implemented as currently written, the operational burden at the working level will become excessive."
The core of the proposal is that if the size of a virtual asset transfer transaction concluded by a domestic virtual asset business with an overseas virtual asset business or a personal wallet exceeds 10 million won, it must be reported to the FIU as a suspicious transaction regardless of risk level.
This could initially lead to an overload of exchange operations. The five major domestic virtual asset exchanges argue that if the regulation takes effect, the number of suspicious transaction reports (STRs), which totaled 63,408 last year, could surge to 5,445,133—an increase of more than 85 times. An industry official said, "If the number of reports multiplies severalfold, related staffing and systems must be significantly expanded. That is an enormous burden on corporations in terms of time, space, and money."
Banks that partner with exchanges to link accounts would also be affected. In the process of determining whether STR-targeted transactions are criminal, measures such as enhanced due diligence (EDD) for customer verification and transaction suspensions may accompany the review. In such cases, even ordinary financial transactions by legitimate customers could be frozen for a time. A banking sector official said, "If account transactions are suspended due to FIU measures, the vast majority of customers are likely to file complaints with the bank. Workloads could increase not only for the exchanges but for banks as well."
Corporations that were planning virtual asset investments also find themselves in a bind. As the authorities prioritize the Special Act amendments, the rollout of phase two of the road map—which would allow virtual asset investments by listed companies and professional investment corporations other than financial firms—has been postponed indefinitely. The Financial Services Commission (FSC) allowed sales for cash-out purposes by nonprofit corporations in June last year (phase one), but the schedule for phase two has not yet been set. A representative of a listed company said, "Due to various regulations, the momentum of Korea's coin market keeps weakening."