South Korea Cracks Down on Unregistered Crypto Exchanges Amid Growing Global Regulations

South Korea has intensified its crackdown on cryptocurrency exchanges operating without proper registration, targeting platforms like BitMEX, CoinW, and KuCoin for non-compliance with the country’s regulatory framework. 

According to a local source, the country’s Financial Intelligence Unit (FIU) is spearheading the enforcement, emphasizing that virtual asset service providers (VASPs) must register and comply with anti-money laundering laws. 

The crackdown follows South Korea’s resolution on virtual asset regulation, which mandates that all exchanges must report their activities to the FIU. 

Authorities have determined that several foreign exchanges, including BitMEX, CoinW, Bitunix, KCEX, and KuCoin, have been offering services in the country without proper registration. 

The Korea Financial Intelligence Unit (FIU) has initiated a sanction process against overseas cryptocurrency exchanges operating illegally in Korea without proper registration. The agency is considering cooperating with the Korea Communications Standards Commission to block…

— Wu Blockchain (@WuBlockchain) March 21, 2025

These platforms have been found operating Korean-language websites and providing marketing and customer services to local investors, which, according to regulators, constitutes illegal business activity. 

In response, the FIU has initiated investigations and sought the cooperation of the Korea Communications Standards Commission to block access to these unregistered platforms. 

Additionally, these exchanges may face severe financial penalties and potential criminal charges for operating outside the legal framework.

An FIU official confirmed that authorities are compiling data on reported cases of investor damages linked to these unregistered exchanges. 

The official further stated that stronger inter-agency cooperation is underway, with visible enforcement actions expected to be implemented before the end of the year.

South Korea’s Virtual Currency Anti-Money Laundering Framework

South Korea’s regulatory stance on virtual assets is firmly rooted in its anti-money laundering framework. 

The framework defines virtual currencies as any electronically transferable certificate or information recognized as a medium of exchange or store of value. 

The country’s guidelines exempt certain digital assets from this definition but maintain strict oversight over exchanges that facilitate crypto-related transactions.

To operate legally, exchanges must first register with the financial authorities and comply with the Virtual Asset User Protection Act. 

This law mandates the segregation of users’ assets from an exchange’s operational funds, requiring custodial measures to protect investors. 

Leading law firm Kim & Chang outlined the law’s core requirements, including the necessity for exchanges to deposit non-virtual assets with a licensed bank or authorized custodian. 

Furthermore, exchanges are held accountable for compensating users in hacking incidents or system failures resulting in financial loss.

Global Trend: The Expansion of Crypto Regulations

South Korea’s decisive actions are part of a growing global shift toward regulatory oversight in the crypto sector. 

In Pakistan, authorities recently established a national crypto council to regulate digital assets and blockchain technology. 

This move signifies the country’s shift from skepticism to a structured regulatory approach, recognizing crypto’s potential economic benefits while ensuring investor protection.

Meanwhile, President Donald Trump has advocated for stablecoin regulations in the United States, emphasizing the need for structured oversight without stifling innovation. 

His stance aligns with the increasing number of countries that see regulation as a means to enhance digital assets’ credibility and long-term sustainability rather than as a challenge to the decentralization ethos.