South Korean financial authorities are cracking down on unregistered overseas cryptocurrency exchanges targeting Korean users.
Enforcing the Specific Financial Information Act
South Korean financial authorities are escalating their efforts to regulate the domestic cryptocurrency market by targeting overseas virtual asset exchanges that operate without proper registration. According to a local report, the Financial Intelligence Unit (FIU), under the Financial Services Commission, is preparing sanctions, including potential site access blocking, against several prominent international exchanges that have been servicing Korean users illegally.
This move underscores South Korea’s commitment to enforcing the Specific Financial Information Act (Special Financial Information Act), which mandates that all virtual asset service providers (VASPs) operating within the country must register with the FIU. This legislation aims to protect Korean investors and prevent illicit financial activities within the digital asset space.
The FIU is reported to have identified several exchanges, including Bitmex, Kucoin, Coinw, Bitunix, and KCEX, as targets for these sanctions. These platforms have reportedly been operating Korean-language websites, actively marketing to Korean investors, and providing customer support in Korean, all without the required registration.
“These exchanges are clearly targeting Korean users, offering localized services without complying with our regulations. This poses a significant risk to our investors and undermines the integrity of our financial system,” stated an unnamed FIU official.
In 2022, the FIU took similar action, requesting the Korea Communications Standards Commission to block access to 16 unregistered overseas exchanges. This initiative, coupled with cooperation from domestic card companies to restrict credit card transactions with these exchanges, led to the withdrawal of several platforms from the Korean market.
