South Korea formalizes self-hosted wallet rules, tiers oversight of offshore exchanges

South Korea’s Financial Intelligence Unit under the Financial Services Commission has announced revised supervisory rules that limit cryptocurrency transfers to self-hosted wallets registered under a customer’s own name and impose a three-tier risk-based framework for transactions with offshore exchanges, Digital Asset reported. Under the revision, domestic virtual asset service providers must restrict transactions with high risks of money laundering or terrorist financing and, in principle, allow transfers only to customers’ personally owned wallets. The move brings a previously voluntary practice into the regulatory fold. Exceptions are allowed for transfers required by law or carried out under the lawful authority of state agencies. Offshore exchanges will be subject to a three-tier regime based on risk, with transactions involving high-risk exchanges fully restricted. The rule took effect on Aug. 20, while the self-hosted wallet and offshore exchange measures are expected to be fully implemented around February next year.