South Korean Authorities Crack Down on Unregistered Cryptocurrency Exchanges Targeting Korean Users

Enforcing the Specific Financial Information Act

South Korean financial authorities are stepping up their efforts to regulate the domestic cryptocurrency market by targeting virtual asset exchanges operating overseas without registration.

The Financial Intelligence Unit (FIU) is preparing sanctions, which may include site access blocking, against several prominent international exchanges that have been illegally providing services to Korean users.

This move follows the enactment of the Special Financial Information Act in 2021, requiring all virtual asset service providers (VASPs) operating in South Korea to register with the FIU.

However, several large exchanges based in China, Hong Kong, Singapore, and other regions have continued to operate in the Korean market without registration, offering services in the language and accepting payments in the currency.

This lack of registration has raised concerns about the potential for scams and lack of investor protection.

The FIU is targeting exchanges such as Bitmex, Kucoin, Coinw, Bitunix, and KCEX for sanctions. These platforms have 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

operability of our financial system,” an FIU official told Korea Economic Daily.

In 2022, the FIU requested the Korea Communications Standards Commission to block access to 16 unregistered overseas exchanges.

Additionally, cooperation with domestic card companies led to the restriction of credit card transactions with these exchanges.

Consequently, several platforms, including HitBTC, Coinsbit, and TokenCan, withdrew their services from the Korean market.