South Korea Takes Action Against 16 Overseas-Based Crypto Companies

South Korean financial authorities ban 16 crypto exchange companies. (photo: doc. pixabay)

JAKARTA - Unregistered cryptocurrency exchanges operating in South Korea will now find their services ground to a halt as the Korea Financial Intelligence Unit (FIU) takes action against 16 companies based overseas.

The FIU has notified its investigative authorities that 16 virtual asset service providers have been conducting business without the required registration. The major exchanges, including the likes of KuCoin, Poloniex, and Phemex, are listed alongside 13 other exchanges that the FIU will take down.

These 16 exchanges are purportedly engaged in business activities targeting domestic consumers by offering Korean-language websites, running promotional events targeting Korean consumers, and providing credit card payment options for cryptocurrency purchases. All of these activities are included in the Law on Financial Transaction Reports.

FIUs have taken action against unlisted exchanges by reporting registration duty violations and intending to notify their counterparts in each country where the business operates. Unregistered entities face up to five years in prison, a fine of about USD 37.000 (IDR 554 million), and a possible ban on future registration in the country.

Requests have also been made to the Korean Communications Commission and the Korean Communications Standards Commission to block domestic access to the respective exchange websites.

Credit card service providers have been asked to identify and block cryptocurrency purchases made with credit cards. The FIU has also issued a requirement for the country's listed exchanges to suspend transactions from 16 unlisted companies in a bid to curb transfers to other platforms.

In July, the South Korean Financial Services Commission announced a deadline for local and foreign cryptocurrency-related businesses to register with the relevant authorities. September 24 is the due date for companies to register before they are liable to face criminal charges and the aforementioned possible fines and penalties.

While the FIU takes aim at unlisted exchanges, the FSC has pledged to speed up the review of 13 different bills relating to cryptocurrencies under consideration by the South Korean National Assembly.

Efforts are underway to produce legislation that has a balanced approach to blockchain development, investor protection and market stability.