The financial authorities of South Korea are considering countermeasures against those crypto exchanges that operate in the country without complying with the strict regulations in place.
The Financial Intelligence Unit (FIU) of the Financial Services Commission has launched an investigation into several platforms suspected of offering services to South Korean investors without proper registration as Virtual Asset Service Providers (VASPs).
Among the possible sanctions, the blocking of access to these exchanges and other restrictive measures are envisaged.
This decision is part of a broader strategy for the regulation of cryptocurrencies in South Korea, a country that has introduced strict rules to ensure greater transparency and security in the sector.
The case also involves major platforms, including KuCoin, while simultaneously suspicions of financial misconduct also emerge among the main South Korean exchanges.
Summary
Monitoring on crypto exchanges: criteria and potential sanctions in South Korea
The South Korean government requires that crypto service operators report their activity to the FIU based on the Specific Financial Information Act.
Anyone offering exchange, custody, brokerage, or management of virtual assets services without following this directive is considered to be operating illegally, risking administrative and criminal penalties.
According to local sources, the FIU has launched an investigation into various exchanges, identifying those that provide marketing and customer support to South Korean investors without being officially registered.
The authorities are planning to technically block access to these services in the country.
An official from the FIU confirmed that the government is considering concrete measures, in collaboration with the Korea Communications Standards Commission, the authority responsible for the regulation of the internet in the country.
The objective is to block access to non-compliant exchanges to protect investors and maintain control of the crypto sector.
Among the platforms that would have come under scrutiny stands out KuCoin, one of the most well-known exchanges globally.
In response to the investigations, a spokesperson for KuCoin told Cointelegraph that the company closely monitors regulatory developments worldwide, including South Korea.
The company reiterated its commitment to compliance normativa, emphasizing that a responsible approach is essential for sustainable development of the crypto sector.
Although the statements of the platform show attention to local regulations, it remains to be seen if it will succeed in complying with the standards required by the South Korean authorities.
The investigations into South Korean exchanges: the Bithumb case and the corruption charges
In parallel with the investigations into foreign exchanges, South Korean regulators are addressing suspicions of financial misconduct also among the local exchanges.
On March 20, prosecutors searched the Bithumb headquarters following allegations of embezzlement against the former CEO, Kim Dae-sik.
Kim is suspected of having used company funds to purchase an apartment, in violation of financial regulations.
However, the company responded by stating that the former CEO had already arranged to reimburse the funds through a loan, rejecting the allegations of misconduct.
Besides the Bithumb case, rumors about illicit practices related to the listing of new digital assets have emerged.
According to anonymous sources cited by Wu Blockchain, some projects have allegedly paid million-dollar fees to intermediaries to be listed on exchanges like Upbit and Bithumb.
In the face of these accusations, Upbit has requested transparency, inviting the source of the accusations to reveal the names of the projects involved.
The absence of concrete details still makes the developments of this matter uncertain, but the reported favoritism practices in the listing could compromise the credibility of the crypto sector in South Korea.
The impact of regulations in South Korea
In recent years, South Korea has adopted strict regulation in the cryptocurrency sector, imposing stringent guidelines for exchanges and financial service operators.
The regulations aim to reduce the risks of money laundering, fraud, and market manipulation, increasing security for investors.
However, these restrictions have led some platforms to operate in a non-compliant manner, putting their presence in the South Korean market at risk.
The possible block of access to foreign exchanges could push local investors to use exclusively services registered in the country, ensuring greater control by the authorities.
On the other hand, some experts believe that excessive regulatory rigidity can limit innovation and competitiveness in the crypto sector. The delicate balance between security and growth in the sector remains a crucial challenge for the future of cryptocurrencies in South Korea.
The South Korean authorities are intensifying their oversight of cryptocurrency platforms, both local and foreign, enforcing compliance with existing regulations.
The possible closure of access to exchanges like KuCoin could revolutionize the crypto market in the country, while the investigations on Bithumb and the corruption charges on other platforms fuel doubts about the integrity of the sector.
The future of the cryptocurrency market in South Korea will depend on the balance between regulation, security, and innovation, in a context that continues to evolve rapidly.