Korean Crypto Exchanges Declare War on 10M Won AML Rule

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Korean crypto exchanges push back against strict 10M won AML trigger

South Korea’s group of digital asset exchanges, known as DAXA and comprising 27 companies, has officially protested proposed changes to financial regulations. They’ve submitted their concerns to the country’s financial regulators, the Financial Services Commission and the Financial Intelligence Unit, regarding updates to the Specific Financial Information Act.

Summary

  • South Korea’s DAXA industry alliance has formally objected to a plan forcing exchanges to treat all overseas crypto transfers above 10 million won (about $6,800) as suspicious transactions.
  • The group warns the rule would blow up annual suspicious transaction reports from roughly 63,000 to more than 5.4 million at the five largest platforms, making compliance “virtually unworkable.”
  • The clash comes as Upbit, Bithumb and Coinone win court relief from earlier sanctions, highlighting growing friction between regulators and the domestic digital asset industry.

The proposed rules would require Korean exchanges to report any transfer to an overseas crypto business exceeding 10 million won. This reporting would happen automatically, regardless of whether the transaction appeared risky or who was involved, meaning simply reaching the value threshold would be enough to trigger a suspicion report.

In my research, I’ve found that DAXA believes the current approach overlooks a key principle established by the Financial Intelligence Unit – allowing low-risk transactions while restricting high-risk ones. Instead, it seems to be requiring exchanges to label a huge number of everyday international transfers as potentially suspicious, which isn’t ideal.

As a crypto investor, I’m hearing that if South Korea fully enforces its new STR rules on the five biggest exchanges – Upbit, Bithumb, Coinone, Korbit, and Gopax – the number of transaction reports could explode. We’re talking about going from around 63,000 reports last year to over 5.4 million! Industry groups are worried this massive increase will completely overwhelm the compliance departments at these exchanges and make it much harder to spot actual money laundering activity. Basically, it could create a ton of noise and drown out the signals we really need to protect the system.

As a crypto investor, I’m following the debate around new regulations, and I’m concerned about a proposal that would require exchanges to do *more* than the standard ‘Know Your Customer’ checks. The Digital Asset Exchange Association (DAXA) is arguing, and I agree, that this extra layer of verification isn’t clearly supported by the original laws. It feels like they’re trying to add obligations that weren’t initially intended, which could create unnecessary burdens for both exchanges and users.

Court wins fuel broader regulatory confrontation

The industry pushback is unfolding as Korean exchanges fight separate sanctions in court.

A Seoul court recently ruled in favor of Dunamu, the company behind the Upbit cryptocurrency exchange, reversing a three-month suspension imposed by the FIU. The FIU had claimed Dunamu allowed nearly 45,000 transactions with 19 foreign platforms that weren’t properly registered. The FIU is now appealing the court’s decision.

Bithumb recently won a court decision that stopped a six-month business suspension related to issues with how they handled financial information. Similarly, Coinone has temporarily avoided a three-month suspension and a 5.2 billion won fine due to problems with their customer identification (KYC) processes.

As a researcher following this closely, I’m seeing that the Financial Intelligence Unit’s consultation period for the 10 million won reporting rule ends on May 11th. After that, the final regulations are expected in July, following standard legal reviews. The problem is, there’s very little time left to find a middle ground between increased monitoring and what cryptocurrency exchanges are saying are unrealistic and burdensome compliance requirements.

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2026-05-04 15:07