South Korea Regulator to Block Unlicensed Foreign Crypto Exchange Services
The South Korean government has called out popular exchanges such as BitMEX, KuCoin, and CoinW for refusing to register as VASPs.
South Korea financial authorities are taking decisive action to block unlicensed foreign crypto asset exchanges operating illegally in the country. The Financial Intelligence Unit (FIU) has identified several unregistered exchanges targeting Korean investors and is preparing sanctions.
Reports indicate that South Korean regulators are giving serious thought to restricting access to these websites as a means of enforcing compliance.
One of the authorities stated, “We are currently reviewing blocking access to unreported overseas exchanges that are providing services to domestic investors through consultation with the Korea Communications Standards Commission…We are organizing damage cases and related data to strengthen communication between authorities, and we expect to see tangible measures taken within this year.”
South Korea Targets Non-Compliant Exchanges
The most recent move comes as part of the government’s efforts to enforce the Specific Financial Information Act, which requires Virtual Asset Service Providers (VASPs) to register with the FIU. Crypto exchanges who are guilty of operating without registering with the FIU will face criminal punishment and administrative sanctions.
Several well-known exchanges, including BitMEX, KuCoin, and CoinW, are in the regulatory spotlight for providing services to Korean users without registering as VASPs.
However, the authorities claimed the exchanges in question were operating Korean-language websites and engaging in marketing and customer support activities with Korean investors as their target audience.
Therefore, as per the existing Special Financial Transactions Act, these platforms that have failed to formally register and receive approval from the FIU as a crypto operator while providing virtual asset services like trading, brokerage, storage, and management in Korea, will be deemed as illegal businesses and will face criminal punishment and administrative sanctions.
Continuous Crypto Clampdown
This is not the first time South Korean authorities have taken similar action against unregistered exchanges. In 2022, the FIU requested the Korea Communications Standards Commission (KCSC) to block access to 16 foreign crypto exchanges that failed to register.
The authorities also collaborated with domestic card companies to inspect and block virtual asset purchase and payment services.
The South Korean government continues to intensify its crypto regulation on both exchanges and crypto assets. In a similar development, the country’s financial authorities announced their intention to scrutinize the listings of around 600 cryptocurrencies on domestic exchanges.
