South Korea's crypto exchange alliance DAXA has formally opposed proposed anti-money laundering rules that would force exchanges to flag every overseas crypto transfer worth 10 million Korean won (about $6,800) as suspicious — even when there's no sign of wrongdoing. In comments submitted ahead of a Monday deadline, the group representing 27 registered virtual asset service providers, including the five largest exchanges — Upbit, Bithumb, Coinone, Korbit and Gopax — argued the change would swamp both exchanges and regulators with an impossible number of reports.
What the proposed rule would do
The amendments, jointly proposed on March 30 by the Financial Services Commission and the Financial Intelligence Unit, would scrap the current judgment-based approach to suspicious transaction reporting. Instead, any overseas transfer exceeding the 10 million won threshold would automatically be flagged. DAXA says that sounds manageable on paper but collapses in practice.
DAXA's math problem
Under the existing framework, South Korea's crypto exchanges file about 63,000 suspicious transaction reports annually. DAXA estimates that figure would explode to more than 5.4 million — an 85-fold jump. That's not a nudge in reporting volume; it's a flood that would make meaningful compliance nearly impossible, the group argued. The public comment window closed May 11. Final rules are expected in July.
Legal battles simmer
The AML fight comes as several major exchanges are already locked in court disputes with regulators over earlier enforcement actions. Upbit's parent company, Dunamu, won a first-instance court ruling on April 9 that canceled a three-month partial business suspension tied to alleged AML failures. Regulators appealed on April 30. The Seoul Administrative Court also agreed to pause enforcement of a six-month partial suspension against Bithumb while its main case proceeds. Coinone, facing a three-month partial suspension and a 5.2 billion won fine over AML-related failures, got a temporary halt on enforcement after filing a legal challenge.
DAXA also opposed a separate requirement in the proposal that would force exchanges to verify the accuracy of customer data, saying it goes beyond what the underlying law requires. With the comment period now closed, the FSC and FIU are expected to finalize the rules by July. Whether the regulators adjust the threshold or keep it at 10 million won — and how the ongoing court cases affect the timeline — remains the open question for South Korea's crypto market.
