The government will centrally manage records of digital assets moving to overseas exchanges or personal wallets through the Bank of Korea’s foreign-exchange information network. The move aims to prevent evasion of foreign-exchange rules and illegal transactions using cross-border digital asset transfers.

The Finance and Economy Ministry said on Tuesday it will issue for public comment a draft enforcement decree revising the Foreign Exchange Transactions Act. The revision details the scope, registration requirements and reporting duties for “virtual asset transfer services” newly created under the revised act in June.

Under the draft, virtual asset transfer services include transfers between domestic digital asset businesses and overseas digital asset businesses. Transfers between domestic digital asset businesses and personal wallets are also subject to management.

Companies seeking to perform the work must register with the government. They must have the IT systems needed for the business and secure at least 2 professionals who either have at least 2 years of experience in foreign-exchange work or have completed relevant training. The decree also includes detailed procedures such as registration items and change notifications.

The key point is that foreign-exchange authorities will be able to grasp information on cross-border digital asset movements in one place.

Registered transfer operators must notify the details of digital asset transfers to the Bank of Korea’s foreign-exchange information network, the foreign-exchange information hub. The government plans to share the collected information with related agencies including the National Tax Service, the Korea Customs Service, the Financial Supervisory Service and the Financial Intelligence Unit (FIU).

Digital assets, unlike existing foreign-exchange transactions handled through banks, can cross borders using overseas exchanges or personal wallets. Critics have said this makes it difficult to track money flows.

The government plans to use the overhaul to monitor cross-border transfer information in an integrated way and to identify evasion of foreign-exchange rules or illegal transactions more quickly.

It will also revamp rules related to overseas payment and settlement operators. It will allow the transfer of foreign-currency prepaid payment instruments to others within a certain amount limit, bringing services operated through a financial sandbox into the regulated system.

The Korea Customs Service’s authority to inspect foreign-exchange transactions will also be expanded. Previously, even if it found violations related to services or capital transactions during inspections of export-import transactions, the scope of inspection was constrained. Under the change, the customs service will be able to directly inspect those matters.

The public comment period runs until the 26th. The government plans to apply the decree from Dec. 3, the effective date of the revised Foreign Exchange Transactions Act, after gathering opinions and completing regulatory review, review by the Ministry of Government Legislation, and meetings of vice ministers and the State Council.

A government official said, “We expect that establishing an integrated monitoring system for information on cross-border virtual asset transfers will help prevent evasion of foreign-exchange rules and illegal transactions using virtual assets and improve the soundness of foreign-exchange transactions.”