South Korea Targets Non-Compliant Crypto Exchanges for Blockade | 2025
South Korea Targets Non-Compliant Crypto Exchanges for Blockade
In a significant move to regulate the cryptocurrency market, South Korean authorities are intensifying their scrutiny of crypto exchange platforms that have allegedly operated without compliance to the country’s financial regulations. The Financial Intelligence Unit (FIU) of the Financial Services Commission is at the forefront of this initiative, as reported by local media outlet Hankyung on March 21.
Regulatory Framework for Crypto Exchanges
Under South Korean law, all crypto exchanges are mandated to register as virtual asset service providers (VASPs) with the FIU, as stipulated by the Specified Financial Information Act. This requirement is crucial for ensuring that these platforms adhere to anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. The FIU is currently investigating a list of exchanges that may have failed to comply with these regulations, leading to potential sanctions.
Investigation and Sanctions
The FIU’s investigation includes consultations with various related agencies to determine the best course of action. Among the sanctions being considered is the blocking of access to these non-compliant exchanges. This crackdown aims to protect South Korean investors from platforms that are operating illegally and without the necessary oversight.
According to reports, several exchanges on the FIU’s radar have been providing marketing and customer support to South Korean investors without going through the required compliance processes. Notably, the crypto exchange KuCoin has been mentioned in these discussions, raising concerns about its operations within the country.
KuCoin’s Response to Regulatory Scrutiny
In response to the allegations, a representative from KuCoin stated that under South Korean laws, operators involved in crypto sales, storage, brokerage, and management must report to the FIU. Failure to comply with these regulations could render their business illegal, exposing them to criminal penalties and administrative sanctions.
Consultations with the Korea Communications Standards Commission
An official from the FIU indicated that measures to block access to the exchanges listed for non-compliance are currently under review. The financial regulator is collaborating with the Korea Communications Standards Commission, which oversees internet regulations, to explore how they can effectively block access to these exchanges.
Recent Developments in the Crypto Market
On March 20, the situation escalated when prosecutors conducted a raid on Bithumb, one of South Korea’s largest crypto exchanges. This raid was prompted by suspicions that the former CEO, Kim Dae-sik, may have violated financial laws during a property transaction involving an apartment purchase. Bithumb has since responded, asserting that Kim had secured a loan to repay the funds in question.
Allegations of Corruption in Exchange Listings
Adding to the turmoil, rumors have emerged regarding intermediaries allegedly being compensated to facilitate the listing of projects on Bithumb and Upbit. According to anonymous sources cited by Wu Blockchain, certain projects have claimed to have paid intermediaries millions of dollars to secure their listings on these prominent exchanges.
The Future of Crypto Regulation in South Korea
The ongoing investigations and regulatory actions highlight the South Korean government’s commitment to enforcing compliance within the cryptocurrency sector. As the market continues to evolve, it is essential for exchanges to adhere to the established regulations to maintain their operations legally.
In conclusion, the South Korean authorities are taking a firm stance against non-compliant crypto exchanges, emphasizing the importance of regulatory adherence in protecting investors and ensuring the integrity of the financial system. As the situation develops, it will be crucial for all stakeholders in the crypto market to stay informed and compliant with the evolving regulatory landscape. For more detailed information, you can read the original article here.
