South Korea Targets Unregistered Crypto Exchanges, Plans Blocking Access

South Korean financial authorities have intensified their efforts to clamp down on unregistered overseas cryptocurrency exchanges operating illegally within the country. The Financial Intelligence Unit (FIU) of the Financial Services Commission has initiated investigations targeting several foreign platforms that have been providing services to Korean users without registering as Virtual Asset Service Providers (VASPs) under the Specific Financial Information Act. This move underscores South Korea's commitment to enforcing stricter regulations and ensuring investor protection in the cryptocurrency market.

The FIU has identified several exchanges, including BitMEX, KuCoin, CoinW, Bitunix, and KCEX, as part of its investigation. These platforms have been found to offer Korean-language websites, marketing efforts, and customer support targeting local investors, all without complying with Korea’s VASP registration requirements. Under current law, any entity involved in virtual asset trading, custody, or brokerage in South Korea must formally register with the FIU. Non-compliance is considered illegal and can result in criminal penalties and administrative sanctions.

Authorities are now considering blocking access to these platforms as a potential enforcement measure. The FIU is in consultation with the Korea Communications Standards Commission (KCSC) to implement website blocks and further limit the exchanges’ ability to operate in the country. This is not the first time South Korea has acted against unauthorized crypto firms. In 2022, the FIU requested the KCSC to block access to 16 unregistered foreign exchanges and worked with domestic credit card companies to prevent cryptocurrency-related transactions. These efforts led many exchanges to withdraw from the Korean market and halt new user registrations.

An FIU official stated that damage cases are being collected and inter-agency communication is being strengthened. “We are currently reviewing blocking access to unreported overseas exchanges that are providing services to domestic investors through consultation with the Korea Communications Standards Commission,” the official reportedly said. “We are organizing damage cases and related data to strengthen communication between authorities, and we expect to see tangible measures taken within this year.”

This crackdown on unregistered overseas crypto exchanges is part of a broader effort by South Korean authorities to regulate the cryptocurrency market and protect investors. The FIU's actions send a clear message to foreign exchanges operating in South Korea that compliance with local regulations is mandatory. The potential blocking of these exchanges highlights the seriousness with which South Korea views the issue of unregistered crypto exchanges and its determination to enforce financial compliance laws.