South Korea Crypto Payment Providers after Terra Collapse

South Korea’s Financial Intelligence Unit Cracks Down on Unregistered Foreign Exchanges

  • South Korea has one of the most active crypto markets in Asia.
  • Crypto activities have soared in Asia since 2020.

South Korea’s Financial Intelligence Unit (FIU) is out to ban the operations of unregistered crypto exchanges. As a result, about 16 foreign exchanges could see their activities halted in the coming days. In a notice it shared, the FIU stated that these virtual assets providers have been operating in the region without the necessary authorization and registrations.

Some top exchanges in the FIU’s list include Phemex, KuCoin, and Poloniex. These exchanges and 13 others have allegedly participated in trading transactions targeting the Korean market. In addition, some of these platforms reportedly run direct campaigns aimed at Korean users, while others provide credit card payments for crypto transactions.

The Financial Intelligence Unit has reportedly taken measures against these unauthorized firms by informing the relevant authorities in their respective countries of operation about their violation of registration obligations.

Unregistered organizations risk a possible ban on operating in South Korea, a five-year prison sentence, and a fine of almost $37,000. Additionally, the FIU has complained to the Korea Communications Commission to restrict local access to the websites of the unregistered exchanges. So, Korean users will be unable to access the platforms in question.

South Korea and Crypto Regulation

South Korean authorities have made efforts to register local and foreign crypto platforms in a bid to increase security and trust. Last month, the country’s Financial Services Commission gave crypto-related firms until September 24 to register their operations with the necessary authorities. Firms that fail to comply will face possible prosecution and other punitive measures.

Legislators in South Korea are joining their colleagues in the U.S. and Europe in acknowledging that the crypto industry has become a part of the world and requires regulations and control. The country’s Financial Services Commission believes rules are required to handle the risks involved in digital assets trading.

According to the FSC’s chairman, Kim Joo-Hyun,

There’s anticipation that virtual assets will accelerate financial innovation but also concerns that they pose risks to investor protection and market stability. The FSC will actively participate in the legislation so that the virtual asset market can grow responsibly based on investor trust.

Crypto activities have surged in South Korea since the pandemic. According to the Korea Financial Intelligence Unit, out of South Korea’s 51 million residents, an estimated 5.6 million participate in its digital asset market, which was worth more than 55 trillion Korean won (US$42 billion) in 2021. 

Lawrence Woriji Verified

Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.

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