South Korea Will Block Unregistered Foreign Crypto Exchanges

South Korea will block unregistered foreign crypto exchanges out of fear that they could be used to launder money and that their users’ data is not safe. According to news1 on August 18, South Korea’s Financial Services Commission (FSC) referred 16 overseas crypto exchanges to investigation authorities for breaching the Specific Financial Information Act.

South Korea Will Block Unregistered Foreign Crypto Exchanges

The legislation prohibits unregistered crypto exchanges from functioning without a license, according to the article, but the 16 businesses have been selling crypto services to Koreans and conducting events aimed at Koreans.

MEXC, KuCoin, CoinW, CoinEX, ZB.com, Bitglobal, Bitrue, Poloniex, BTCEX, Phemex, XT.com, Pionex, BTCC, DigiFinex, AAX, and ZoomEX are among the exchanges impacted.

The infringement was identified by the FSC’s Financial Information Analysis Institute, according to the report.

The businesses were told about their responsibility to register their operations by the regulators, but they did not comply.

FSC Want Them Blocked

The FSC wishes to prevent these exchanges from continuing to operate under its jurisdiction.

It has requested that the Broadcast and Communications Commission and the Korea Communications Commission restrict domestic access to its websites.

Meanwhile, the regulator wishes to prohibit credit card companies from providing services to these businesses.

Exchanges Do Not Possess ISMS Certificate

Officials identified the exchanges as ill-equipped since they lack the Information Security Management System (ISMS) accreditation, putting their users’ personal information in danger.

Furthermore, officials stated that malevolent actors may utilize the exchanges to launder money.

An individual who operates an unregistered and unlawful exchange might face up to 5 years in jail or a fine of 50 million won ($37,900) under the Act.

For the next five years, the operator will be unable to register as a domestic virtual asset operator.

The legislation applies to both international and domestic exchanges in the country.

Crypto Regulation In South Korea

South Korea has one of the most extensive crypto legal systems.

In 2021, the government required crypto companies to obtain ISMS certification, causing some crypto exchanges to leave the nation.

However, 35 virtual asset providers might register in the nation; five of these exchanges, UpBit, Coinone, Gopax, Korbit, and Bithumb, account for more than 99% of all crypto transactions in the country.

Meanwhile, the collapse of the Terra ecosystem, which happened recently,  has heightened the country’s focus on cryptocurrency regulation.

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