TLDR
- The Financial Intelligence Unit of South Korea is homing in on global exchanges such as BitMEX and KuCoin for non-compliance with registration mandates.
- These platforms stand accused of operating Korean-facing websites and marketing to South Korean customers without lawful registration.
- Authorities are weighing the imposition of blocks and penalties on these exchanges as a deterrent.
- Exchanges like BitMEX, KuCoin, CoinW, Bitunix, and KCEX are facing serious consequences, potentially including criminal charges.
- This is part of a continued regulatory effort following a 2022 crackdown that saw the barring of 16 unregistered platforms.
In its latest move, South Korea's financial regulators are targeting several foreign crypto firms, including BitMEX and KuCoin, for allegedly offering unapproved service to domestic users.
It's been discovered that these exchanges run Korean-language sites, marketing and supporting local investors, but they aren't registered under the VASPs framework.
The FIU is now assessing measures to restrict access to these foreign entities in consultation with the Korea Communications Standards Commission.
An FIU spokesperson confirmed that the organization is reviewing how to effectively limit access to unlawful exchanges, collecting damage reports to boost inter-agency efforts.
According to South Korean legislation, all crypto-related operations must be registered with the FIU, failing which companies may face severe legal actions.
This action is part of South Korea’s comprehensive strategy to instill regulation in the cryptocurrency sector, seeking to harmonize industry growth with investor protection.
Building on efforts from 2022, when South Korea sought to block 16 foreign exchanges including KuCoin and others, the current measures aim to uphold regulatory integrity.
Tightening the Crypto Net
Following this rigorous enforcement, many exchanges exited the South Korean market; current estimates show a significant reduction from 2024's numbers.
Exchanges like GDAC, ProBit, Huobi Korea, and Bitrade have not renewed necessary registrations, resulting in their removal from the recognized list.
These targeted platforms have continued servicing South Korean clients, leveraging Korean-language interfaces and promotional campaigns despite non-compliance.
Beyond registration issues, South Korea is enhancing its anti-money laundering policies for the cryptocurrency landscape.
In a related move, South Korean authorities declared intentions to fortify anti-money laundering regulations as a part of a larger framework to thwart financial misdeeds.
Alongside, discussions are underway to explore blockchain innovations, with the Bank of Korea initiating a CBDC trial expected to span three months.
Meanwhile, the central bank opted against establishing a Bitcoin reserve due to concerns over volatility and security risks. about Bitcoin’s South Korean exchanges face scrutiny beyond registration challenges; Bithumb underwent searches as prosecutors investigate possible fund embezzlement by a former executive.
Reports circulate about third parties securing payments for listing projects on major exchanges such as Bithumb and Upbit, sparking reactions from the implicated exchanges.
Upbit has called for media outlets to provide transparency on digital assets paying brokerage fees, signifying tensions within regulatory discussions.
By the year's end, the FIU plans to take decisive action against unregistered exchanges, compiling data to facilitate operations against these entities.
These regulatory endeavors signify a concerted effort by South Korea to enforce compliance and ensure the crypto industry operates within the law.
Maisie is a seasoned journalist specializing in crypto and financial news, contributing to well-regarded platforms like Moneycheck.com, level-up-casino-app.com, and serving as Editor in Chief at Blockfresh.com.
