South Korea to Close Down Crypto Exchanges That Fail to Comply
South Korean regulators are cracking down on unregistered crypto exchanges tighter, which represents an extension of the crackdown against financial non-compliance in the digital asset market.
FIU Probes Unreported Crypto Platforms
South Korea’s Financial Services Commission Financial Intelligence Unit reportedly is investigating several crypto exchanges that allegedly have been operating in an illegal capacity without registering as Virtual Asset Service Providers (VASPs). The exchanges could be hit with access blocks and other sanctions.
Exchanges Suspected of Targeting Korean Users Illegally
According to Hankyung, some platforms such as KuCoin offered Korean consumers services—such as promotion and customer service—without satisfying the requirements for compliance in the country. FIU is advising Korea Communications Standards Commission, the online regulator, on how access to the websites can be restricted.
KuCoin Reacts to Regulation Inquiry
KuCoin issued a statement reiterating its ongoing commitment to global compliance with regulations. A spokesperson reiterated that KuCoin is dedicated to ethical business and closely monitoring the Korean regulatory environment.
Non-Compliance Could Lead to Criminal Charges
As per the Specified Financial Information Act, cryptocurrency exchanges involved in trading, custody, brokerage, or management need to report to the FIU. Non-compliance can amount to illegality and lead to criminal and administrative penalties.
Pressure on Local Exchanges Too
Domestic exchanges are also not excluded. The authorities raided Bithumb on March 20 on suspicion that former CEO Kim Dae-sik had siphoned money out of it. Listing fee scandals on Bithumb and Upbit are also emerging, with middlemen paying millions to list particular crypto projects.
Regulatory Storm Brewing
The government of South Korea is increasing its regulation of the crypto market, targeting foreign and domestic exchanges alike. As the FIU investigations continue, the industry is under mounting pressure to adhere to strict financial regulations—or risk being excluded from the Korean market entirely.
