South Korea is taking significant steps to regulate the digital asset landscape as it expands its ban on applications from various cryptocurrency exchanges servicing its citizens. Recently, on April 11, the country’s Financial Services Commission (FSC) announced that 14 crypto exchanges, including notable platforms such as KuCoin and MEXC, have been blocked on the Apple Store.
This decision, detailed in a report made public on April 14, stems from the exchanges allegedly operating as unregistered virtual asset service providers (VASPs) targeting South Korean citizens. According to the FSC, the Financial Intelligence Analysis Institution (FIU) is committed to further blocking the applications and websites of these unregistered operators to prevent incidents of money laundering and user harm.
The move to restrict access to these applications follows a similar action taken by Google Play, which blocked access to several unregistered exchanges on March 26. In total, the FSC published a list identifying 22 platforms operating in violation of regulations, with 17 of them already barred from Google’s marketplace.
The 17 crypto exchanges blocked on Google Play. Source: FSC
The implications of this decision are significant for users, as individuals will no longer be able to download the apps from the Apple Store, nor will existing users have the ability to update them. The FSC has underscored that engaging in unreported business activities carries criminal repercussions, which could include penalties of up to five years in prison and fines amounting to 50 million won (approximately $35,200).
FIU Considers Sanctions Against Unregistered VASPs
The issue of unregistered exchanges has been a point of discussion since March 21, when South Korean publication Hankyung reported the FIU and the FSC’s consideration of sanctions against those crypto exchanges operating illegally in the country. These sanctions may involve blocking access to their applications, thereby further tightening the regulatory landscape.
In South Korea, all operators involved in activities related to crypto sales, brokerage, management, or storage are required to report their operations to the FIU. Noncompliance with these regulatory expectations can lead to significant penalties.
The rising scrutiny of crypto exchanges comes at a time when the number of crypto users in South Korea has reached a considerable milestone, surpassing 16 million—equivalent to over 30% of the population. Industry analysts predict this number could exceed 20 million by the end of 2025.
Moreover, recent statistics indicate that over 20% of South Korean public officials hold cryptocurrencies, with these assets collectively valued at approximately $9.8 million as of late March. The portfolio of these officials encompasses a range of currencies, including Bitcoin (BTC), Ether (ETH), XRP, and Dogecoin (DOGE).
This evolving regulatory environment underscores the government’s commitment to ensuring a secure and compliant digital asset ecosystem, as it works to balance innovation against potential risks inherent in the crypto market.
