South Korean Lawmaker Calls For Stronger Oversight As Suspicious Crypto Reports Hit Record Numbers

As the number of South Korean crypto investors surpasses the 10 million milestone, a lawmaker from the country’s ruling party has requested countermeasures to address the rising number of suspicious transaction reports (STRs) involving digital assets.

Suspicious Activity Reports Hit Record High

On Monday, Jin Sung-joon, a Democratic Party of Korea (DPK) lawmaker on the National Assembly’s Planning and Finance Committee, reportedly warned of the potential exploitation of digital assets amid the crypto industry’s increasing adoption.

“As stablecoins are increasingly used as payment and settlement tools in the real economy, the potential for their misuse in foreign exchange crimes like illegal currency exchange is growing,” Jin stated.

The lawmaker shared data from the Financial Intelligence Unit (FIU), revealing that the number of STRs received from local virtual asset service providers (VASPs) has nearly doubled this year. STRs hit a total of 36,684 cases between January and August, exceeding the combined cases from the previous two years.

The number of cases from the first eight months of 2025 represents an 86% increase from 2024’s total cases. Notably, the number of cases received has surged significantly over the past five years, jumping from 199 in 2021 to 10,797 in 2022. Meanwhile, the FIU recorded 16,076 and 19,658 STR cases in 2023 and 2024, respectively.

For context, domestic VASPs are required to report transactions suspected of money laundering and illicit activities to the FIU under the current Specific Financial Information Act. Additionally, exchanges must formally register as a VASP with the FIU to obtain a license and be able to conduct business in South Korea, such as storage, brokerage, and management of crypto assets.

Earlier this year, the financial authority found that many well-known overseas crypto exchanges, including BitMEX, KuCoin, CoinW, Bitunix, and KCEX, were not registered as VASPs, which led to 17 crypto apps being blocked in March.

According to Korea Customs Service (KCS) data highlighted by the lawmaker, the value of crypto-related crimes referred to prosecutors hit 9.5 trillion won, or $7.1 billion, between January 2021 and August 2025. 90% of these crimes involved illegal cross-border remittances facilitated by unlicensed channels.

South Korea’s Crypto Oversight

Authorities have also confirmed cases involving the use of stablecoins in illegal transactions. Jin affirmed that all relevant agencies must work together to take effective actions that address the rise of these new types of crimes and develop a system to prevent these illicit activities.

Relevant agencies, including the Customs Service and the FIU, must implement effective crackdowns—such as tracking criminal funds and blocking disguised transfers—while also developing systematic countermeasures against these new types of foreign exchange crimes.

It’s worth noting that the Financial Services Commission (FSC) has been working to develop digital assets legislation and shift its regulatory approach over the past year. The financial authority is expected to release the long-awaited framework for the issuance and distribution of won-backed stablecoins next month.

As the stablecoin sector gains momentum worldwide, South Korean lawmakers have pushed to establish the necessary legislation, with multiple bills being introduced in the National Assembly this year, including two rival bills in July by Korea’s ruling and opposition parties.

The banking sector has reportedly been in talks with Tether and Circle to discuss potential partnerships, as it has been exploring various legalization scenarios over the past few months. 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.”