South Korea is aiming at unregistered foreign exchanges like BitMEX and KuCoin for operating illegally, with potential measures to block access being explored.
The financial authorities in South Korea have initiated actions against various foreign cryptocurrency exchanges, including BitMEX and KuCoin, for catering to Korean users without proper registration as mandated by the Specific Financial Information Act.
Korean regulators are contemplating penalties for several foreign exchanges that have been offering their services to South Korean investors without the necessary registration, as indicated in a report. A representative from the Financial Intelligence Unit stated that they are “evaluating access-blocking measures for foreign exchanges still serving Korean clients, in collaboration with the Korea Communications Standards Commission.”
The report highlights that crypto exchanges such as BitMEX, KuCoin, CoinW, Bitunix, and KCEX are being examined for operating Korean-language websites and marketing to South Korean users while neglecting to register as crypto businesses in the nation. According to existing regulations, any entity involved in cryptocurrency trading, custody, or management within South Korea is required to register with the Financial Intelligence Unit, and non-compliance could result in criminal charges and penalties.
In 2022, the Financial Intelligence Unit asked the Korea Communications Standards Commission to block 16 unregistered foreign exchanges, including KuCoin, MEXC, and Poloniex, leading many exchanges to exit the South Korean market.
The FIU disclosed in February that there are now just 31 registered crypto trading firms in South Korea, marking a significant decrease of over 26% from 42 in 2024. Among those delisted were GDAC, ProBit, Huobi Korea, and Bitrade, among others. In addition to various operational challenges, many platforms did not renew their registrations, resulting in their removal from the national registry, the report further notes.