South Korea has imposed a ₹17.5 crore fine on major cryptocurrency exchange Bithumb for violating personal information protection laws during cross-border data transfers. According to the Personal Information Protection Commission (PIPC), the decision marks one of South Korea's most direct crypto privacy enforcement actions to date, with the commission holding its 12th plenary session and agreeing to impose the 210 million won penalty on Bithumb Korea Co., Ltd. The violation occurred during cryptocurrency transactions between September and November 2025, with the investigation focusing on customer data linked to Tether's USDT market activity. As reported by the PIPC, the commission concluded that Bithumb failed to comply with legal requirements governing overseas transfers of personal information across multiple international destinations.
South Korea has significantly expanded cryptocurrency disclosure requirements for its public debt relief program by including virtual asset holdings in applicant asset reviews. According to reports from local media, the Financial Services Commission announced after a June 25 review meeting with the Korea Asset Management Corporation (KAMCO) that it would revise the New Start Fund, a debt restructuring program for small business owners and self-employed borrowers, to strengthen property assessments, debt adjustment standards, and post-approval monitoring. The commission stated that authorities will now examine investment assets such as cryptocurrencies and unlisted shares that were previously difficult to verify through financial statements and government administrative records. As reported by BitcoinWorld, this move represents a significant step toward integrating digital assets into South Korea's financial safety net, with the government aiming to prevent debtors from hiding assets while ensuring those with genuine financial hardship receive appropriate relief.
The Financial Services Commission announced that debt forgiveness under the New Start Fund will depend more closely on each applicant's repayment ability. According to reports, current rules allow principal reductions of 60% to 80% for unsecured debt that has remained delinquent for more than 90 days, with low-income and vulnerable borrowers eligible for reductions of up to 90%. The commission noted that the existing minimum reduction left limited room to distinguish borrowers with stronger repayment capacity. Borrowers whose repayment capacity exceeds 100% will now face a minimum principal reduction of 30% instead of 60%, with authorities lowering debt relief by between 5 and 30 percentage points depending on repayment ability. As reported by BitcoinWorld, under the revised system, the debt reduction rate is no longer based solely on traditional income and asset declarations but now factors in an applicant's crypto holdings, which are treated as part of their overall repayment capacity.
The Bithumb case revealed systematic compliance failures beyond the initial violation, with investigators uncovering a second compliance failure involving transfers with 13 separate overseas crypto exchanges. According to the PIPC findings, Bithumb shared customer names, wallet addresses, and birth dates without obtaining the complete consent required under national privacy regulations. A key finding involved a clear consent mismatch, where Bithumb told users that their data would be moved to the Stellar exchange, but investigators determined that the information actually ended up on a platform operated by BingX, thereby breaching required destination accuracy under South Korean privacy law. The commission ordered Bithumb to revise its internal procedures for cross-border data transfers and stressed that exchanges must clearly explain where customer information will be processed before any transfer occurs across international platforms or third-party operators.
South Korea's push for institutional infrastructure is driven by two key trends: stablecoins and real-world asset (RWA) tokenization. According to recent reports, stablecoins are now a mainstream policy and business priority in Korea, with the question currently being debated among policymakers, banks, and industry players regarding whether Korea will create a regulated market for won-backed stablecoins. The urgency stems from an estimated $115 billion in capital flowing offshore to overseas exchanges, much of it into dollar-denominated stablecoins like USDC. Major financial institutions are building practical use cases, with KB Financial Group testing real payments and remittance flows, including QR-code payments at major Korean coffee chains and cross-border remittances to Vietnam completed in under three minutes at 87% lower cost than SWIFT. Internet platforms are also expanding their crypto ecosystem presence, with NAVER's acquisition of Dunamu (operator of Upbit) combining Korea's largest crypto exchange with Naver Pay's 34 million users.
South Korea's crypto regulatory environment is evolving through comprehensive measures that extend beyond debt relief programs. The Ministry of Finance confirmed in May that a 22% tax on cryptocurrency gains is scheduled to take effect beginning January 2027, after previous postponements, which is likely to affect a large base of retail investors holding digital assets in the country. Additionally, blockchain analytics and law enforcement coordination has moved forward with Chainalysis reporting a memorandum of understanding with the Korean National Police Agency (KNPA) to enhance investigative capability within South Korea, with focus on improving responses to crypto crime including attacks linked to North Korea. The regulatory landscape demonstrates that South Korean authorities are simultaneously strengthening compliance expectations for regulated entities and expanding domestic enforcement capacity, as exemplified by the $136,000 fine imposed on Bithumb for violating personal information protection rules tied to cross-border data transfers during order book sharing and virtual asset transfer processes.
