As the Korea Financial Intelligence Unit (FIU) initiates action against 16 foreign-based companies, unregistered cryptocurrency exchanges operating in South Korea may see their operations come to a grinding halt.
16 virtual asset service providers have been operating their businesses without the required registrations, according to the FIU, which has informed its investigation authorities. Major exchanges including KuCoin, Poloniex, and Phemex were mentioned with 13 other exchanges that the FIU is expected to restrict.
By providing Korean-language websites, hosting marketing campaigns aimed at Korean customers, and allowing credit card payments for bitcoin transactions, all 16 exchanges allegedly participated in business activities targeting local consumers. The Financial Transactions Report Act applies to each and every one of these actions.
The FIU has already taken action against the unregistered exchanges by reporting the violation of registration duties and intends to inform their counterparts in the respective countries that the businesses operate. Unregistered entities face five years in prison, a fine of ~$37,000 and a potential ban on future registration in the country.
A request has also been submitted to the Korea Communications Commission and the Korea Communications Standards Commission to block domestic access to the websites of the exchanges in question.
Credit card service providers have been requested to identify and block cryptocurrency purchases made with credit cards. The FIU has also issued a requirement to registered exchanges in the country to suspend transactions from the 16 unregistered companies in an effort to curb transfers to other platforms.
South Korea’s Financial Services Commission announced a deadline for local and foreign-based, cryptocurrency-related businesses to register with the relevant authorities in July 2022. Sept. 24 is the due date for companies to register before they are liable to face criminal prosecution and the prospective fines and penalties previously mentioned.
While the FIU takes aim at unregistered exchanges, the FSC has vowed to expedite the review of 13 different bills relating to cryptocurrencies under consideration of the National Assembly. Efforts are being made to produce legislation that has balanced approach to blockchain development, investor protection and market stability.