South Korea Lowers Crypto Travel Rule to ₩1M and Tightens AML Oversight
South Korea’s Financial Services Commission (FSC) has tightened anti‑money‑laundering (AML) rules for virtual assets by lowering the crypto Travel Rule threshold to ₩1,000,000 (~$680). Domestic exchanges must collect sender and recipient names and wallet addresses for deposits or withdrawals above the new threshold. The FSC will also increase scrutiny of overseas exchanges, ban transactions with foreign venues deemed high AML risk, and impose tougher due diligence on virtual asset service providers, including checks on criminal records, financial condition and major shareholders’ credibility. These measures aim to close AML gaps, raise compliance standards, and curb illicit flows through crypto. Traders should monitor possible liquidity shifts, exchange delistings or service restrictions, tighter KYC/AML procedures, and short‑term volatility around affected venues as counterparties and routing change.
Neutral
The policy tightens AML controls and raises operational costs and compliance burdens for exchanges and service providers, which can reduce certain illicit flows and improve long‑term trust in the market. In the short term, however, the immediate price effect on major cryptocurrencies is likely limited because the measures target transaction monitoring, counterparty selection and exchange relationships rather than banning trading or specific tokens. Traders may see localized liquidity shifts, temporary volatility around affected exchanges, and operational disruptions (delistings, withdrawal friction) that could cause short‑term price moves for assets concentrated on specific venues. Over the longer term, improved AML standards can reduce regulatory uncertainty and counterparty risk, which is mildly positive for institutional adoption. Overall, net price impact on major cryptocurrencies is expected to be neutral to modestly mixed: short‑term friction and venue‑specific volatility but potentially positive confidence effects over time.