Unregistered cryptocurrency exchanges operating in South Korea could see their services halted as Korea’s Financial Intelligence Unit (FIU) takes action against 16 foreign-based companies.
The FIU has notified its investigation authority that 16 virtual asset service providers have been doing business without the necessary records. Major exchanges, including the likes of KuCoin, Poloniex and Phemex, were listed along with 13 other exchanges to be affected by the FIU.
The 16 exchanges allegedly engaged in commercial activities targeting domestic consumers by offering Korean-language websites, hosting promotional events targeting Korean consumers, and offering credit card payment options for cryptocurrency purchases. All these activities are included in the Report of financial transactions Act.
The FIU has already taken action against unregistered exchanges reporting the violation of registration duties and intends to inform their counterparts in the respective countries where the companies operate. Unregistered entities face up to five years in prison, a fine of approximately $37,000 and a possible ban from future registration in the country.
Related: Small South Korean Crypto Exchanges Face Increasing Regulatory Heat
A request has also been sent to the Korea Communications Commission and the Korea Communications Regulatory Commission to block domestic access to the websites of the exchanges in question.
Credit card service providers have been asked to identify and block cryptocurrency purchases made using credit cards. The FIU has also issued a requirement to the country’s registered stock exchanges to suspend transactions of 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 cryptocurrency-related companies to register with relevant authorities in July 2022. September 24 is the deadline for companies to register before face criminal proceedings and the possible fines and penalties mentioned above.
While the FIU is targeting unregistered exchanges, the FSC has pledged to speed up the review of 13 different cryptocurrency-related bills under consideration by the National Assembly. Efforts are being made to draft legislation that takes a balanced approach to blockchain development, investor protection, and market stability.