Korean Government Takes Aim At Unregistered Overseas Exchanges

As of 2025, the global appetite for crypto assets is higher than ever. Thanks to the high returns from tokens like Bitcoin and Ether and the slew of high-quality new tokens, investors are flocking to all sorts of platforms to get their needs met and this shows no signs of stopping.

For example, investors in South Korea are turning to sites like Upbit to see which new tokens are getting listed and thus, which they should put their money into (source: https://99bitcoins.com/kr/cryptocurrency/new-upbit-listings/).  But even as investors navigate this complex landscape, they have to deal with potential pushback from regulators. Case in point, the South Korean government is taking swift action against foreign exchanges they believe are working against the country’s interest.

The Case Of The Crypto Exchanges

Within South Korea, any crypto exchange associated with an overseas company that wants to serve the market has to be duly registered. This is as per the Specific Financial Information Act (Special Financial Information Act),  which mandates that every overseas exchange that wants to serve the South Korean market must be registered with the Financial Intelligence Unit. 

However, according to reports, some of these are not completing the required registration. As such, the Financial Intelligence Unit (FIU), which operates under the Financial Services Commission,  is working to put sanctions on some of these exchanges. Some of these sites have been reportedly offering Korean language services, including customer support, without due registration.

In response to this, the FIU is considering blocking the sites entirely so that they cannot serve the Korean market. Some of the exchanges reportedly on the list for sanctions include Bitmex, Kucoin, Coinw, Bitunix, and KCEX. 

This wouldn't be the first time this is happening as, back in 2022, the Korean government blocked several crypto exchanges from accessing the market due to on lack of registration. In response, some of these exited the market entirely. While we do not know for sure when these sanctions will be placed, we can expect them rather soon. 

The Complexities Of Crypto's Globalization 

About a decade ago, this level of regulatory effort being put into the crypto industry would not have been as likely. At the time, cryptocurrency was mainly an underground industry that regulators on the government as a whole did not pay much attention to. An investor in South Korea could trade with very little restriction as a result. But as the crypto industry has become more financially successful and more visible, there are larger stakes to its success or failure. Governments are, for example, putting more effort into collecting crypto-related taxes because the amounts in question are significant.

Then there is the political angle to using cryptocurrency. The US, for example, is looking into more aggressive support of the crypto industry on a political level. From the hosting of the first crypto summit at the White House to the appointment of a crypto czar to even the president of the United States launching meme coins, the space is very politically charged.

Ironically, while South Korea is working to make sure that crypto exchanges stay within their laws, its neighboring country North Korea is under fire for its crypto-related activities. Just recently, it's been alleged that the North Korean hacking group Lazarus Group was behind the $1.5 billion crypto heist from Bybit. This hack, which was one of the biggest in the world, further put the Korean government under scrutiny because it is believed that it sponsors the Lazarus group.

The funds from this hack and others are thought to be used in support of the country's nuclear weapons program amidst its sanctions from the United States and other countries. Needless to say, there are greater political implications of one country using crypto and this is perhaps why the South Korean government is so adamant about crypto exchanges staying within the bounds of the law.

Just like in 2022, we will have to wait and see whether the affected exchanges choose to adjust their behaviour to comply with South Korean regulations or exit the market entirely.

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