South Korea Cracks Down on Unregistered Crypto Exchanges
South Korea is intensifying its regulatory scrutiny of cryptocurrency businesses, aiming to protect investors from unapproved platforms. This week, Google Play took action by blocking 17 foreign crypto exchanges, including KuCoin, from being installed on Android devices in the country. In parallel, discussions are underway between the Financial Intelligence Unit (FIU) and Apple to remove unregistered crypto apps from the App Store, signaling a broader effort to tighten oversight in the crypto sector.
Regulatory Actions Against Foreign Exchanges
The South Korean Financial Services Commission (FSC) has identified 22 cryptocurrency platforms operating without the necessary legal registration. Among these, 17 exchanges, including notable names like KuCoin, MEXC, and Phemex, have been restricted from the Google Play Store. As a result, existing users of these apps will no longer receive updates, effectively limiting their access to the platforms. The FSC’s actions are part of a larger initiative to ensure that only approved firms can engage with investors, thereby reducing the risks associated with unregulated trading.
The Financial Supervisory Service (FSS) is responsible for overseeing crypto-related registrations in South Korea. The absence of government oversight for unregistered businesses poses significant risks to investors, including potential data breaches and exposure to fraudulent activities. The FSC has emphasized that these unregistered platforms are not subject to anti-money laundering regulations, which could facilitate illicit financial activities. As a precaution, the FSC has urged users to verify the registration status of any crypto business they engage with and to withdraw their assets if they are dealing with unregistered operators.
Collaboration with Tech Giants
In addition to actions taken by Google, South Korean authorities are actively collaborating with Apple to eliminate unregistered crypto business apps from the App Store. The FIU, alongside the Korea Communications Standards Commission, is working to identify and take action against domestic unregistered crypto businesses. This partnership aims to enhance the safety of the digital asset landscape in South Korea and protect users from potential scams and security breaches.
The FSC has warned that owners of unregistered crypto firms could face severe penalties, including fines of up to KRW 50 million (approximately Rs. 29 lakh) or even imprisonment for up to five years. This stern warning underscores the seriousness of compliance with regulatory standards in the rapidly evolving crypto market.
Investor Protection Measures and Future Outlook
To further safeguard investors, South Korea has recently enacted the ‘Virtual Asset User Protection Act,’ which aims to bolster protections for cryptocurrency traders. The FSC is also preparing to allow corporations to participate in the virtual asset market under its supervision, indicating a move towards a more structured and regulated crypto environment. As of now, the FIU maintains a list of registered crypto platforms on its website, which currently includes 28 officially recognized firms. This resource is intended to help traders engage only with legally compliant businesses. Despite these efforts, both Google and Apple have reported an increase in risky crypto applications appearing on their platforms, highlighting the ongoing challenges in combating fraud and protecting users in the digital asset space.
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