South Korea

South Korea's Yellow Envelope Act, effective March 10, 2026, amends the Trade Union and Labor Relations Adjustment Act (TULRAA) to expand the definition of 'employer' to include entities exercising substantial and specific control over working conditions, even without a direct employment contract. Companies using EOR, outsourcing, or staffing arrangements in South Korea must assess their day-to-day control over workers to avoid collective bargaining obligations and legal liabilities.

South Korea's financial regulators have announced a phased roadmap to transition traditional capital markets onto distributed ledger technology, with a target of a full tokenized securities market by February 2027. The final phase will incorporate onchain stablecoin settlement. Compliance professionals should prepare for new requirements around custody, settlement, and reporting standards for tokenized securities.

A South Korean court sentenced the CEO of crypto lender Delio to 15 years in prison for defrauding over 1,100 investors of $50 million. This enforcement action underscores the regulatory and legal risks in the crypto lending sector, highlighting the importance of compliance with licensing and investor protection requirements.

South Korea's PIPC fined KT Corporation KRW 53.979 billion for a data breach affecting 16,647 subscribers, citing inadequate security controls and failure to report a malware infection. The enforcement action mandates security improvements and proposes stronger penalties for evidence destruction, signaling increased regulatory scrutiny in South Korea.

South Korea plans to implement a 22% tax on annual cryptocurrency gains exceeding 2.5 million won ($1,740) starting January 1, 2027, after multiple delays. The tax applies to income from transferring or lending crypto, with no loss carryforwards, potentially driving investors offshore.

The Bank of Korea will launch the second phase of its CBDC pilot in September 2026, involving nine major banks issuing deposit tokens. This signals a significant step toward potential commercialization of a digital won, requiring financial institutions to prepare for CBDC infrastructure and compliance.

South Korea will revise its National Property Act to classify cryptocurrencies and intellectual property as national assets, effective Feb. 4, 2027. The government will also pilot tokenized government bonds and recognize blockchain-ledger systems as security registries, impacting financial and blockchain sectors.

Korea's FSC finalized a roadmap expanding mandatory ESG disclosure to companies with assets over KRW 10 trillion from 2028, then KRW 5 trillion from 2029, covering over 3,100 companies. Standards align with ISSB IFRS S1/S2, with transitional reliefs and mandatory third-party verification from 2030.

South Korea's PIPC imposed a record $409 million fine on Coupang for a data breach affecting over 37 million individuals, failure to notify victims, and evidence destruction. This signals heightened enforcement of data privacy laws in South Korea.

South Korea's data protection regulator imposed a record $409 million fine on Coupang for a data breach affecting 37.55 million customers, citing violations of security obligations and unlawful data collection. This enforcement action signals heightened regulatory scrutiny and severe penalties for non-compliance under South Korea's data privacy regime.

South Korea is testing deepfake regulations during its upcoming local elections, aiming to combat AI-generated content through legal measures. The outcome may influence global AI governance and election integrity.

Korea's Sustainability Disclosure Standards (KSDS), aligned with ISSB, will require listed companies to disclose climate-related information starting in 2028. A phased implementation applies, with larger companies reporting first. Companies should begin gap analysis and data collection now.

A South Korean court lifted a six-month partial business suspension on Bithumb, originally imposed by the FIU for AML violations. The ruling signals ongoing regulatory enforcement in the crypto sector, though the status of a $24.6 million fine remains unclear.

South Korea is finalizing its Digital Asset Basic Act, prompting major financial institutions like KBank to build blockchain and stablecoin infrastructure for cross-border remittances. Companies in the crypto and fintech space should prepare for new regulations on custody, tokenized assets, and cross-border activity.

The Bank of Korea's new governor outlined a digital currency strategy prioritizing CBDCs and bank-issued deposit tokens while omitting stablecoins, signaling a shift toward a bank-led model. This includes increased regulatory scrutiny of crypto markets and non-bank finance with expanded monitoring, as South Korea considers the Digital Asset Basic Act to regulate stablecoin issuance.

South Korea's central bank has suspended CBDC development and shifted focus to stablecoins, with eight banks collaborating on a won-backed stablecoin project. The new government has submitted legislation allowing qualifying companies, including nonbanks, to issue stablecoins, signaling a significant policy change in digital currency regulation.

South Korea is launching a three-month pilot of its central bank digital currency (digital won), allowing up to 100,000 citizens to use it for retail purchases at participating merchants including 7-Eleven. This represents a significant step in the country's digital currency regulatory framework development, with transaction caps and privacy implications that financial institutions and retailers need to monitor.

South Korea's central bank is evaluating circuit breaker-style safeguards for crypto markets after a major transfer error at Bithumb exchange caused significant losses. This represents a potential new regulatory framework to address operational risks and volatility in digital asset trading, signaling increased oversight of crypto exchanges.

The Bank of Korea has recommended implementing stock-market-style circuit breakers on domestic cryptocurrency exchanges, which would be incorporated into the pending Digital Asset Basic Act. This proposal follows a major incident at Bithumb exchange and aims to stabilize crypto markets through automatic trading halts during sharp price swings or abnormal orders.

South Korea's Financial Intelligence Unit (FIU) has imposed a $24.6 million fine and a 6-month partial suspension on cryptocurrency exchange Bithumb for anti-money laundering violations, including failures in customer identity verification (KYC) and improper transaction blocking. This enforcement action reflects broader regulatory tightening in South Korea's crypto market, following similar penalties on other major exchanges like Upbit and Korbit.