South Korea Flags Record Suspicious Crypto Transactions in 2025 as Stablecoin Use Surges
South Korea’s financial watchdog has reported a sharp rise in suspicious cryptocurrency transactions this year, with the volume of flagged activity already setting a new record.
, shared with parliament member Jin Sung-joon, show that 36,684 suspicious transaction reports (STRs) were filed by registered crypto service providers between January and August 2025.
That number surpasses the combined filings of 2023 and 2024, highlighting how rapidly illicit crypto activity is expanding.
Authorities say the bulk of these reports are linked to hwanchigi, an illegal practice where funds are moved abroad using stablecoins before being funneled back into Korea and withdrawn in won.
Stablecoins such as USDT are a preferred tool, allowing large sums to be transferred rapidly across borders. Customs officials recently exposed a scheme involving more than 57 billion won (roughly $42 million) in USDT remittances.
Between 2021 and August 2025, prosecutors received referrals for crypto-related crimes valued at over 9.5 trillion won. Investigators estimate that more than 90% of these cases were tied to unregistered foreign platform networks.
The surge has prompted calls for tighter regulation. Lawmakers are urging stricter oversight of virtual asset providers, more comprehensive tracking of stablecoin flows, and deeper coordination between financial regulators, customs, and prosecutors.
“The surge in suspicious activity shows that current controls are not enough,” Jin said, pressing regulators to respond more rapidly to evolving laundering methods.
South Korea passed the Virtual Asset User Protection Act earlier this year, aiming to secureguard investors and strengthen compliance requirements.
But with criminals adopting more sophisticated strategies, regulators now face the challenge of striking a balance between tightening enforcement and maintaining the country’s position as one of the most active crypto markets in Asia.
Stablecoin Development Gains Ground in South Korea
Stablecoins are drawing fresh attention in South Korea following the launch of the country’s first won-backed digital currency.
, a stablecoin designed to maintain a one-to-one peg with the Korean won.
The token was rolled out on the Avalanche blockchain later than undergoing full scrutiny from Woori Bank, which reviewed its structure and reserves ahead of launch.
With KRW1, South Korea joins a growing list of nations introducing locally backed stablecoins, a move viewn as part of a broader shift in global digital finance.
The launch comes as the United States advances regulation , widely considered the most comprehensive framework for stablecoins to date.
South Korea’s step toward KRW1 suggests an effort to align with international trends while testing market appetite for regulated digital assets.
At the identical time, ). later than months of pilot testing with more than 100,000 participants, the Bank of Korea placed its CBDC project on hold, signaling a shift in focus toward private-sector stablecoin models.
