South Korea is taking serious steps to curb the operations of unregistered crypto businesses in the country. This week, Apple blocked the apps of 14 crypto exchanges from its App Store in South Korea for not being in compliance with the country’s licensing regime. The Financial Services Commission (FSC) confirmed the development this week, claiming that KuCoin and MEXC are among the affected exchanges. The development is in alignment with Seoul’s efforts to make its crypto ecosystem safe for investors and curb the risks against national financial stability.
All 14 blocked exchanges are based overseas and were offering unregistered crypto products and services in South Korea, the announcement said. The national Financial Intelligence Unit (FIU) coordinated with Apple to have these unregistered exchanges restricted for download. This implies that the impacted apps can neither be installed anymore nor can they be updated.
The financial authorities of South Korea have detailed criteria for judging domestic business activities of foreign crypto firms.
“Whether a Korean website is provided, whether there are marketing events to attract Korean customers, whether payment in Korean Won is supported, etc. are taken into consideration when making a decision,” the FSC explained.
The Financial Supervisory Service (FSS) oversees crypto-related registrations in the country. Unregistered crypto businesses lack government protection and can pose financial risks to the users.
Businesses identified flouting regulatory mandates can face up to five years in prison along with a fine of KRW 50 million (roughly Rs. 30 lakh). Despite these potential outcomes, South Korean authorities have time and again caught crypto firms violating mandates. The FSC said, it blocked 16 unregistered abroad-based crypto firms in 2022 and six more in 2023.
“In the future, FIU will continue to block domestic access through mobile applications (apps) and Internet sites of overseas unreported virtual asset operators in order to prevent money laundering risks and user damage in consultation with relevant organisations,” the FSC added.
Earlier in March, Google’s Play Store blocked 17 foreign crypto exchanges, including KuCoin, from being installed on Android devices in the country. As of now, it remains uncertain whether Seoul will set a compliance timeline for the affected exchanges or slap them with fines.
Meanwhile, the government of South Korea has asked crypto investors to only engage with registered and licensed entities. The FIU maintains a list of registered crypto platforms on its homepage.
“When dealing with unreported businesses you may be exposed to risks such as personal information leaks and hacking, and there is a risk that you may be used as a money laundering channel as you are not subject to anti -money laundering management and supervision,” the FSC noted.
As of April 11, a total of 28 virtual asset business operators are officially recognised in South Korea.
