South Korea to Sanction Crypto Exchanges that Fail to Register Before September

According to the Financial Services Commission (FSC) in South Korea, foreign virtual asset services providers (VASPs), including cryptocurrency exchanges operating in the country, are mandated to register with the regulator before September 24th or risk getting blocked.

As reported in April by Learn2Trade, South Korea has implemented a new regulatory requirement threatening heavy sanctions and fines for all defaulting VASPs. While this legislation came into effect at the end of March this year, crypto exchanges in South Korea received a grace period, which expires in two months.

The FSC, via its Korean Financial Intelligence Unit (KoFIU), noted that VASPs have two months to register. As a result, the regulatory body has forwarded notices to 27 foreign companies to remind them of this necessity and what is at stake. The official statement from the FSC reads:

“The Act requires VASPs to register with the KoFIU as the law equally applies to foreign VASPs that conduct activities outside Korea but have domestic consequences within Korea.

Thus, if any VASPs conduct business operations targeting Koreans, they are required to register with the KoFIU and comply with requirements under the Act regarding their business operations targeting Koreans.”

Should any of these companies and organizations default on registration, they “shall cease their business operation targeting Koreans from September 25th, 2021.” Defaulting companies that choose to continue operations will face strict penalties, including up to five years behind bars or a fine of 50 million Korean won (approximately $44,000).

Smaller Crypto Exchanges in South Korea are Threatening Legal Action

Recently, South Korean authorities have tightened their grip on the crypto industry, especially crypto exchanges. Feeling threatened by the government’s recent actions on its operations, some smaller trading platforms are thinking of taking legal measures.

The government recently instructed local banks to cease rendering services to crypto exchanges, except prominent crypto exchanges in Korea like UPbit, Bithumb, Coinone, and Korbit.

 

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