South Korea Imposes Stricter Crypto Rules, Mandates Enhanced Verification and Trading Limits

South Korea’s Financial Services Commission (FSC) has introduced stricter regulatory measures for cryptocurrency exchanges and non-profit organizations, requiring enhanced customer verification processes beginning in June. The new rules, announced in an official statement, permit these entities to sell digital assets under specific conditions while aiming to mitigate financial risks such as money laundering. The move reflects South Korea’s ongoing efforts to balance innovation in the crypto sector with robust oversight.
Under the revised regulations, non-profit organizations will be allowed to sell cryptocurrencies received through donations and sponsorships, but only those listed on at least three major South Korean won (KRW)-denominated exchanges. This restriction ensures transparency and reduces exposure to less liquid or speculative assets. Meanwhile, cryptocurrency exchanges can liquidate user fees paid in crypto, provided the assets are among the top 20 by market capitalization on five major KRW-based platforms. The FSC emphasized that these limitations align with its goal of stabilizing the crypto market and preventing misuse of donated funds.
The FSC also tightened anti-money laundering (AML) safeguards by mandating thorough verification of transaction purposes and fund sources for non-profits. Donations must be processed through domestic KRW exchange accounts to trace their origins. For exchanges, the regulator introduced internal control requirements, including board approvals for crypto sales plans and prior public disclosures of such activities. These measures aim to ensure accountability and reduce the potential for illicit financial activities.
In addition to these changes, the FSC outlined stricter criteria for listing meme coins and “zombie coins”—tokens with little to no active use—that have historically caused volatility in crypto markets. Such coins will now only be permitted for trading if they meet minimum transaction volume thresholds. This step underscores the regulator’s focus on curbing speculative practices and protecting investors from high-risk assets.
The announcement follows South Korea’s broader shift toward formalizing crypto regulations. Earlier this year, the country signaled plans to ease restrictions on institutional investors, potentially allowing corporations to trade and hold digital assets. The FSC’s latest measures build on this framework, aiming to create a safer, more regulated environment while enabling legitimate crypto transactions. The June implementation date provides exchanges and non-profits with a clear timeline to adjust their operations to comply with the new requirements.
Analysts note that the FSC’s approach strikes a balance between fostering innovation and maintaining financial stability. By restricting sales to established cryptocurrencies and imposing rigorous KYC checks, the regulator seeks to reduce risks without stifling market activity. However, the emphasis on top-tier assets could concentrate liquidity in a smaller subset of coins, potentially limiting diversification opportunities for investors. The inclusion of transaction volume thresholds for meme coins also highlights an attempt to address speculative bubbles that have plagued the sector in the past.
South Korea’s crypto market has grown significantly in recent years, driven by retail investor enthusiasm. The FSC’s regulations aim to align the sector with global standards while addressing local concerns. By formalizing sales processes and imposing stricter oversight, the regulator is signaling its commitment to integrating crypto into the broader financial system responsibly. As the rules take effect, exchanges and non-profits will need to adapt swiftly to meet compliance demands, setting a precedent for regulatory approaches in other jurisdictions.
While the measures do not fully liberalize South Korea’s crypto landscape, they represent a measured step toward legitimizing the industry. The FSC’s focus on transparency, AML controls, and market stability suggests a long-term strategy to build a sustainable ecosystem. The coming months will test whether these rules can achieve their objectives without deterring participation, as stakeholders adjust to the new framework.

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