tl;dr
South Korean financial authorities are considering imposing sanctions on several crypto exchanges, including BitMEX, KuCoin, CoinW, Bitunix, and KCEX, for failing to comply with local regulations. The overseas exchanges have operated illegally by not reporting as Virtual Asset Service Providers (VAS...
South Korean financial authorities are considering imposing sanctions on several crypto exchanges, including BitMEX, KuCoin, CoinW, Bitunix, and KCEX, for failing to comply with local regulations. The overseas exchanges have operated illegally by not reporting as Virtual Asset Service Providers (VASPs) under the Specific Financial Information Act. The Financial Intelligence Unit (FIU) is evaluating measures such as blocking site access and is collaborating with relevant organizations. This is part of a continuous crackdown on non-compliant crypto platforms, with previous actions including asking exchanges to shut down and blocking access to overseas exchanges. The number of registered crypto firms in South Korea has decreased, and the latest crackdown is expected to further shrink this number.
The Financial Intelligence Unit (FIU) of South Korea’s Financial Services Commission said these overseas crypto trading platforms are operating illegally in the country because they have failed to report as Virtual Asset Service Providers (VASPs) under the Specific Financial Information Act. The Special Financial Transactions Act states that entities engaging in crypto trading, storage, and management in South Korea must formally report their activities to the FIU. Failure to do so could attract criminal punishment and administrative sanctions because the firms will be considered illegal businesses. In addition, these exchanges have been operating Korean-language websites without providing marketing and customer support for South Korean investors. As a result, the FIU is now investigating their activities, evaluating appropriate procedures with relevant organizations, and strongly considering measures like blocking site access.
This is not the first time financial authorities in South Korea have made moves to sanction or block investor access to non-compliant crypto exchanges. In September 2021, the FIU asked more than 60 exchanges that could not meet up with the local anti-money laundering (AML) rules and registration requirements to shut down their services and exit the country. At the time, only four trading platforms, including Upbit, Bithumb, Coinone, and Korbit, were fully operational, while about 28 others, which obtained security certificates, could offer certain services without won settlements. Furthermore, in 2022, the FIU asked the Korea Communications Standards Commission to block access to 16 overseas exchanges that failed to report their operations as VASPs. The regulatory agency also joined forces with local card companies to block crypto purchases and payment services made from these platforms. Earlier this year, the FIU revealed there are only 31 registered crypto firms in South Korea, down 26% from 42 in 2024. With the latest crackdown, that number is bound to shrink even further.