Korea’s Financial Intelligence Unit is cracking down on foreign-based cryptocurrency exchanges that are yet to register with relevant authorities in the country.
Unregistered cryptocurrency exchanges operating in South Korea could see their services grind to a halt as the Korea Financial Intelligence Unit (FIU) takes action against 16 foreign-based firms.
The FIU has notified its investigative authority that 16 virtual asset service providers have been carrying out business without the necessary registrations. Major exchanges, including the likes of KuCoin, Poloniex and Phemex, were listed alongside 13 other exchanges that are set to be hamstrung by the FIU.
All 16 exchanges have 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. These activities all fall under the Financial Transactions Report Act.
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.
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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.