South Korea Drafts Strict CARF Rules for Crypto Wallets
TREE NEWS reports: South Korea’s Ministry of Economy and Finance has issued a preliminary administrative notice of amendments to its Crypto-Asset Reporting Framework (CARF) rules. The proposal would require domestic crypto asset service providers to retain data on external personal wallets and overseas wallet addresses involved in transactions for six years. Additionally, single crypto payments of $50,000 or more for goods or services would need to be reported.
What the Rules Would Require
The draft regulation targets the point where centralized exchanges and custodians interact with self-custody and foreign wallets. Under the plan, service providers must collect and store:
- Addresses of external personal wallets used by customers
- Addresses of overseas wallets involved in transfers
- Transaction records for crypto purchases of goods or services above the $50,000 threshold
The retention period of six years aligns with South Korea’s broader tax and AML record-keeping standards, giving authorities a longer window to trace flows across borders.
Why It Matters
South Korea is one of the world’s most active retail crypto markets, with a dense network of domestic exchanges and a large base of self-custody users. The CARF framework, developed by the OECD, is designed to mirror the Common Reporting Standard (CRS) for traditional finance, enabling automatic exchange of tax information between jurisdictions. South Korea’s early and strict implementation could set a precedent for other Asian economies.
The six-year retention requirement for external wallet addresses is notable because it pushes compliance obligations beyond simple KYC at account opening. Exchanges would need to build systems to tag, store, and retrieve wallet data over long periods, raising operational costs and data privacy concerns.
The $50,000 reporting threshold for crypto payments is also significant. It suggests regulators are increasingly focused on crypto’s use as a payment medium, not just as an investment asset. Merchants and payment processors that accept crypto could face new reporting burdens if they operate in South Korea.
Industry Pushback and Compliance Costs
Domestic exchanges are likely to argue that the rules are technically challenging. External wallet addresses are not always attributable to a specific individual, and users may generate new addresses for each transaction. Forcing exchanges to retain such data for six years could create large, sensitive datasets that are attractive targets for hackers.
There is also the question of overseas wallets. If a Korean user sends funds to a foreign exchange or a DeFi protocol, the domestic exchange may have limited ability to verify the counterparty. The rules could push more activity toward decentralized platforms that fall outside the reporting perimeter.
Forward-Looking Perspective
South Korea’s CARF amendments are part of a global trend toward tighter reporting on cross-border crypto flows. If finalized, the rules could take effect as early as 2026, aligning with the OECD’s target timeline for CARF implementation. Other jurisdictions, including the EU and Japan, are also moving forward with similar frameworks.
For the industry, the message is clear: the era of anonymous self-custody is being slowly enclosed by reporting requirements. Exchanges that invest early in robust data infrastructure and privacy-preserving compliance tools may gain a competitive edge, while smaller players could struggle with the cost. The coming months of consultation will determine how far South Korea pushes its strict interpretation.
