Cryptocurrency Exchanges in Korea May Be Banned from Serving Local Customers Without Permission from Regulators

The Financial Services Commission (FSC) of South Korea announced new restrictive measures against cryptocurrency exchanges operating in the country. Thus, those cryptocurrency exchanges that have not received permission from the relevant financial regulators, but still continue to operate in South Korea, will be blocked.

What is the meaning of the measures?

According to a statement submitted to a policy committee in South Korea's National Assembly, sanctions will be imposed on crypto asset service providers in the country who fail to comply with the obligations imposed in March. The statement also applies to cryptocurrency exchange Binance.

In general, cryptocurrency companies running exchanges will have to register with the Financial Intelligence Unit (FIU), which is responsible for combating money laundering. These companies will have to be authorized to operate within six months, according to the said obligation.

Foreign cryptocurrency exchanges targeting Korean people will face blocked access to their websites and criminal probes unless they register with South Korea's anti-money laundering body, the nation's top financial regulator said Thursday. (Korea Herald) https://t.co/MZqWr9g4R7

— Financial Services Commission - FSC Korea (@FSC_Korea) July 22, 2021

What do crypto exchanges have to do to operate in Korea?

Certain steps will need to be taken in order to obtain this permit. For example, crypto companies will need to match each user's account information on the exchange with their bank account information. This will be necessary in order to improve security to prevent money laundering.

Comments from authorities

Eun Seong-soo, chairman of the Financial Services Commission, said that these companies should register with the FIU. In addition, Eun Seong-soo added that, to determine if any foreign crypto exchange is operating in the Korean market, one should only look for Korean language support.

FSC said that crypto operators, including Binance, that are not based in South Korea and have not received approval from local financial regulators will be banned from serving local customers starting Sept. 25.