South Korea’s FIU Cracks Down on Unregistered Crypto Exchanges

Highlights:

• South Korea’s FIU is deliberating new sanctions for unregistered VASP operators.
• The financial regulator may block access to the unregistered crypto platforms.
• The FIU is investigating five exchanges for offering crypto services to South Koreans without VASP licenses.

On March 22, South Korean local media reported that the country’s Financial Intelligence Unit (FIU) is considering sanctioning unregistered crypto exchanges operating in the country. According to the report, the FIU might block these crypto platforms if they fail to register as approved VASP operators under the Special Financial Information Act.

An FIU official stated:

“We are organizing damage cases and related data to strengthen agreement, and we expect to see tangible measures taken within this year.”

The Korea Financial Intelligence Unit (FIU) has initiated a sanction process against overseas cryptocurrency exchanges operating illegally in Korea without proper registration. The agency is considering cooperating with the Korea Communications Standards Commission to block…

— Wu Blockchain (@WuBlockchain) March 21, 2025

South Korea’s FIU Targets Five Crypto Platforms

The FIU said it has opened investigations into five overseas unregistered crypto exchanges operating in the country. They include BitMEX, KuCoin, CoinW, Bitunix, and KCEX. The financial authority noted that these exchanges have been serving South Koreans without an FIU-approved VASP license.

In addition, the FIU mentioned these exchanges operated Korean-language websites without marketing options for users. Beyond investigations, the financial authority has started contacting appropriate bodies to enforce sanctions against these exchanges.

The FIU Maintains Strict Registration Compliance Policy

Despite growing global crypto regulatory changes, the FIU has reiterated its strict registration policy. Under the Special Financial Transactions Act, every company that wants to offer virtual asset trading, management, storage, and brokerage services must first apply for a VASP license with the country’s financial authorities. After applying, they must wait for the FIU to validate their applications before offering their services to users.

The FIU warned that failure to follow due procedures will result in criminal punishment and administrative sanctions. In 2022, the FIU, through the Korea Communications Standards Commission, blocked access to 16 offshore unregistered crypto platforms. In addition, the financial regulator ordered local card companies to restrict these unregistered crypto firms from receiving payments. This move forced several companies out of the South Korean crypto market.

Korean financial regulator initiates enforcement on unregistered overseas crypto exchanges

The Financial Intelligence Unit (FIU) under South Korea’s Financial Services Commission (FSC) has launched enforcement actions against overseas cryptocurrency exchanges serving Korean…

— CoinNess Global (@CoinnessGL) March 21, 2025

South Korea’s Central Bank Rejects Bitcoin for the Nation’s Reserve

On March 17, Crypto2Community reported that the Bank of Korea (BOK) rejected Bitcoin for the country’s foreign reserve. According to the report, the central bank raised concerns over Bitcoin’s high volatility, adding that it would spike transactional costs when swapping Bitcoin for cash. BOK also noted that Bitcoin fails to meet the International Monetary Fund’s (IMF) foreign exchange reserve standard. Hence, it does not consider Bitcoin an option for the nation’s foreign reserves.

In related news, South Korea has introduced strict rules to combat money laundering via cryptocurrencies. Part of the efforts to curb crypto-related financial crimes includes establishing a new task force. The setup will work closely with the Financial Supervisory Service to monitor new risks every two months.

In another development, South Korea announced plans to launch its CBDC trials for real-world transactions under the “Digital Test Project Hangang.” The program, slated for April, will involve seven banks and 10,000 participants. South Korea’s central bank noted it will use the trial to access the Digital Won CBDC’s role in restructuring the nation’s fintech system.