The Financial Intelligence Unit of South Korea recently referred approximately 40 unregistered virtual asset service providers to the police authority. It reflects Seoul’s increasing attempts to regulate the cryptocurrency firms that operate in South Korea. According to South Korean law, all crypto exchanges are mandated to get the ISMS Certification and FIU registration prior to operating.
As per The Chosun Daily, only 28 entities are currently registered in accordance with the established rules and norms. A platform offering its services to local clients without proper certification acts illegally in terms of the country’s legislation. In the course of its research, the FIU revealed that there were several ways employed by offshore exchanges to lure local clients. For example, some exchanges advertised their services in Korea via Telegram and KakaoTalk while continuing to function abroad.
Additionally, there were private money changers who exchanged stablecoins into Korean currency for tourists, students, and foreigners working in Korea. Moreover, content creators got paid to promote cryptocurrency exchanges from abroad in Korea. The FIU stressed that any non-registered platforms do not fall under the protection provided by the country’s laws.
Tough Global Crypto Compliance Standards from South Korea
This move is part of South Korea’s wider campaign to increase global compliance standards for cryptocurrencies through FATF measures. Lee Hyung-joo, the FIU Director, recently attended the thirty-fourth plenary of the FATF in Paris. At the conference, Lee called on the FATF member states to abolish the transaction thresholds used under the crypto Travel Rule. South Korea intends to implement identity checks for all crypto transactions from August.
Identity checks are currently mandatory for transactions amounting to more than one million won, which translates to about $730. This means that all the transactions that will be carried out by participating exchanges would have to meet these compliance standards. Lee contends that inconsistent licensing standards lead to regulatory arbitrage, thus weakening the implementation of anti-money laundering regulations.
Regulatory Enforcement is Growing Further
In South Korea, cryptocurrency regulatory actions have been expanding during 2026 in various regulatory areas. In previous cases, the authorities initiated criminal proceedings regarding an individual who was engaged in running cryptocurrency pump and dump operations. Moreover, government entities also enhanced their collaboration with financial organizations and credit card organizations to prevent any illegal transactions between countries.
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