South Korean authorities have marked a record number of suspicious cryptocurrency transactions this year, surpassing the total from the past two years combined.
According to the Korea Herald, data provided by the Financial Intelligence Unit (FIU) to National Assembly member Jin Sung-joon and the Korea Customs Service (KCS) shows that from January to August 2025, local virtual asset service providers (VASP) submitted a total of 36,684 suspicious transaction reports (STR).
STRs are an important tool in South Korea's anti-money laundering (AML) regulatory framework. Under relevant laws, financial institutions, casinos, and VASPs must submit STRs when there are reasonable grounds to suspect that funds are related to criminal proceeds, money laundering, or terrorist financing.
The data indicates that the number of STRs submitted from January to August 2025 has already exceeded the combined total for 2023 and 2024, which were 16,076 and 19,658 STRs, respectively. This figure also far surpasses the levels seen in 2021 (199 STRs) and 2022 (10,797 STRs).
According to South Korean officials, most of the flagged transaction flows involve "hwanchigi" (illegal foreign exchange remittances). In these cases, criminal proceeds are converted into cryptocurrency through overseas platforms, which are then transferred to local exchanges and exchanged for Korean won.
From 2021 to August 2025, the KCS has referred cryptocurrency-related criminal cases worth $7.1 billion to prosecutors, with approximately $6.4 billion (about 90%) related to hwanchigi cases.
In May of this year, customs officials seized an underground broker suspected of illegally transferring about $42 million between South Korea and Russia using the Tether (USDT) stablecoin. Two Russian citizens were charged with conducting over 6,000 illegal transactions between January 2023 and July 2024.
In light of such cases, Jin urged institutions like the KCS and FIU to strengthen law enforcement, track criminal funds, and disrupt disguised money transfers.
The official stated that government agencies must establish systematic measures to respond to new types of foreign exchange crimes.
South Korea's data reflects a broader policy dilemma faced by global regulators. While stablecoins and digital currencies offer faster and lower-cost payment methods, they also open new channels for illegal fund flows.
The European Union's Markets in Crypto-Assets (MiCA) regulation addresses the risks of illegal cross-border transactions by requiring issuers to obtain licenses to ensure transparency.
The regulation also imposes restrictions on large stablecoin transactions, limiting daily transfers of stablecoins to 1 million transactions or a cumulative amount of €200 million.
According to proposals from European Central Bank policymakers in 2021, the personal holding limit for the digital euro was set at €3,000 per person to prevent uncontrolled foreign exchange activities.
The Bank of England suggested in 2023 that the personal holding limit for the digital pound be set between £10,000 ($13,558) and £20,000. However, the UK cryptocurrency community criticized this approach, stating that these restrictions are impractical in practice.
Related: Surge in Ethereum on-chain activity suggests ETH price will rise to $5,000
Original: “South Korean Regulators Reveal Record High Suspicious Crypto Transactions in 2025”
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