Authorities in South Korea have identified a historic level of suspicious cryptocurrency transactions this year, surpassing the totals from the last two years combined.
According to data from the Financial Intelligence Unit (FIU) shared with Representative Jin Sung-joon and statistics from the Korea Customs Service (KCS), Yonhap News reported that local virtual asset service providers (VASPs) submitted 36,684 suspicious transaction reports (STRs) from January to August 2025.
STRs are essential tools in South Korea’s Anti-Money Laundering (AML) framework. Financial institutions, casinos, and VASPs are required to submit STRs when they have reasonable grounds to believe that the funds may involve criminal activities, money laundering, or terrorist financing.
The number of STRs submitted this year exceeds the totals from 2023 and 2024, which were 16,076 and 19,658, respectively. This year’s figures also greatly surpass 2021’s 199 cases and 2022’s 10,797 cases.
Focus on illegal foreign remittances and stablecoins
Officials indicated that most of the flagged transactions involved “hwanchigi,” or illegal foreign exchange remittances. In these instances, criminal proceeds are converted into cryptocurrency using offshore platforms, routed through domestic exchanges, and then withdrawn in won.
From 2021 to August 2025, the KCS referred $7.1 billion in crypto-related crimes to prosecutors, with $6.4 billion (approximately 90%) linked to hwanchigi schemes.
In May, customs officials discovered an underground broker accused of using Tether (USDT) stablecoin to illegally transfer about $42 million between South Korea and Russia. Two Russian nationals reportedly conducted over 6,000 illegal transactions from January 2023 to July 2024.
Due to incidents like these, Jin urged agencies, including the KCS and FIU, to enhance enforcement efforts to track criminal funds and curb disguised remittances.
The official emphasized the need for government agencies to develop systematic countermeasures against emerging forms of foreign exchange crimes.
Related: South Korea’s crypto firms set to gain ‘venture company’ status next week
A global regulatory challenge
South Korea’s statistics reveal a larger regulatory challenge faced by authorities worldwide. While stablecoins and digital currencies facilitate quicker and less expensive payments, they also create new avenues for illicit transactions.
The European Union’s Markets in Crypto-Assets (MiCA) regulation aims to mitigate risks associated with illicit cross-border transactions by mandating that issuers obtain licenses to ensure transparency.
MiCA also imposes limits on large stablecoin transactions, capping transfers to 1 million transactions daily or a notional value of 200 million euros each day.
In 2021, discussions within the European Central Bank floated the idea of capping digital euro holdings at 3,000 euros per person to curb unregulated foreign exchange activities.
In 2023, the Bank of England proposed individual limits on digital pounds ranging from 10,000 ($13,558) to 20,000 British pounds. However, UK crypto organizations criticized this proposal, arguing that such limits are ineffective in practice.
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