- South Korea‘s Financial Intelligence Unit (FIU) is investigating crypto exchanges allegedly operating without proper registration as virtual asset service providers (VASPs).
- Authorities are considering blocking access to non-compliant exchanges, with KuCoin reportedly among platforms under scrutiny.
- Domestic exchanges like Bithumb also face separate investigations over potential financial misconduct.
South Korea‘s financial regulators are intensifying their oversight of cryptocurrency exchanges, threatening to block platforms that operate without proper registration under the country’s financial laws. The Financial Intelligence Unit (FIU) has compiled a list of exchanges allegedly serving Korean investors without submitting required regulatory filings, according to a March 21 report from local media outlet Hankyung.
Under South Korea’s Specified Financial Information Act, all cryptocurrency platforms must register as virtual asset service providers (VASPs) with appropriate regulatory authorities before offering services to Korean residents. This requirement applies to companies engaged in crypto sales, storage, brokerage, and management activities.
The FIU, which operates under the Financial Services Commission, has begun consulting with related agencies to determine appropriate sanctions for non-compliant exchanges. The primary countermeasure being considered is blocking Korean users’ access to these platforms entirely.
KuCoin, a major global exchange, was specifically mentioned among the targeted platforms. When contacted for comment, a KuCoin representative told Cointelegraph: “We are closely monitoring regulatory developments across all jurisdictions, including Korea. At KuCoin, we believe that compliance is essential for the healthy and sustainable growth of the crypto industry—this has always been our stance and will continue to guide us as we move forward. We remain committed to supporting the industry’s long-term development through proactive and responsible practices.”
According to an FIU official quoted in the Hankyung report, the financial regulator is currently working with the Korea Communications Standards Commission to determine the most effective methods for implementing potential access blocks to non-compliant exchanges.
The regulatory crackdown extends beyond foreign exchanges to domestic platforms as well. On March 20, prosecutors raided Bithumb, one of South Korea’s largest cryptocurrency exchanges, following allegations that its former CEO, Kim Dae-sik, misappropriated company funds to purchase an apartment. Bithumb has responded by stating that Kim had already arranged a loan to repay the funds in question.
Additionally, both Bithumb and Upbit face scrutiny after rumors emerged about intermediaries allegedly receiving payments to list certain cryptocurrency projects. According to claims reported by Wu Blockchain from anonymous sources, some projects paid millions in fees to secure listings on these major Korean exchanges. In response, Upbit has demanded that the media outlet disclose the list of digital asset projects that allegedly paid such brokerage fees.
The escalating regulatory pressure reflects South Korea’s ongoing efforts to bring cryptocurrency activities under tighter financial supervision, with non-compliant operators potentially facing both criminal penalties and administrative sanctions if they continue to serve Korean users without proper registration.
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