South Korean financial authorities solicit reports on unlicensed crypto exchanges

Financial regulators in South Korea released an update on Dec. 4 asking users to report any unlicensed cryptocurrency exchanges offering services to users in the region.

The Digital Asset Exchange Association (DAXA) and the Financial Intelligence Unit (FIU) of South Korea collaborated on the initiative. DAXA includes five of the major virtual asset exchanges operating in the country, such as Upbit, Bithumb, Coinone, Korbit and Gopax.

According to the regulators, the goal of receiving these reports is to find domestic and foreign virtual asset business operators targeting Korean citizens and not working per Article 7 of the Specific Financial Information Act.

Reports will first be reviewed by DAXA, and then the results will be forwarded to the FIU, after which it will respond to the former to determine the status of the operator and whether it needs to be notified.

An official from DAXA said that if operators continue to engage in “undeclared business activities,” then the FIU “plans to take necessary measures, including notifying the investigative agency.”

DAXA said reports can be filed through its tip email address, and should include all the information related to the business, reasons for suspicion, and evidence of its undeclared business activities.

This development comes as South Korea continues to ramp up its involvement in the crypto industry. On Nov. 14, the Democratic Party of South Korea mandated that its parliamentary candidates must disclose any personal crypto holdings for “transparency” purposes.

In October, the South Korean Financial Supervisory Service (FSS) announced it is beginning preparations for regulations to supplement the Virtual Asset Users Protection Act, which was passed earlier in 2023. According to the FSS, the new regulations are anticipated to be in place by January 2024.

On Nov. 23, South Korea’s central bank announced that it plans to invite 100,000 citizens to test out its forthcoming central bank digital currency (CBDC) in 2024.

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