South Korea has intensified its efforts to regulate the cryptocurrency business, cracking down on unregistered digital currency platforms. Following this, 17 international cryptocurrency trading applications, including KuCoin and MEXC, have been deleted from the Google Play Store and Apple App Store in the country. This action is part of a bigger effort to protect investors and guarantee that all platforms follow South Korea’s strict financial regulations.

South Korea’s Regulatory Stance on Unregistered Exchanges

On April 11, the South Korean Financial Services Commission (FSC) said in a report that it has removed 14 unauthorized cryptocurrency exchanges from the Apple App Store, including KuCoin and MEXC. A report filed on April 14 stated that these platforms were operating unlawfully. The Financial Intelligence Unit (FIU) has declared that it will continue to restrict such apps and websites to prevent money laundering and protect users. The paper emphasizes that:

“Foreign virtual asset business operators who wish to engage in domestic business activities must report in advance to the Financial Intelligence Unit (hereinafter referred to as the FIU) in accordance with the Act on Reporting and Use of Specific Financial Transaction Information (hereinafter referred to as the Specific Financial Information Act)

The Financial Services Commission (FSC) of South Korea discovered that some bitcoin exchanges were operating illegally. These exchanges failed to register correctly, violating the Specific Financial Transaction Information Reporting and Use Act. The violation came from offering services in Korean, advertising to local customers, and accepting payments in Korean won. Under South Korean legislation, any foreign cryptocurrency company seeking to operate in the nation must first register with the Financial Intelligence Unit (FIU) to guarantee compliance with regulatory norms.

According to reports, as of March 31, over 16 million South Koreans, or over 30% of the country’s population, had used cryptocurrency exchanges. This number is expected to increase to 20 million by 2025. The government’s regulatory activities are also aimed at public officials, who by late March had together invested more than $9.8 million in cryptocurrencies, accounting for 20% of total market holdings. The most popular digital currencies in South Korea are Bitcoin, Ethereum, XRP, and DOGE.

The platforms that have been blocked include KuCoin, MEXC, Poloniex, Phemex, XT.com, Bitrue, CoinW, CoinEX, ZoomEX, BTCC, DigiFinex, Pionex, Blofin, Apex Pro, CoinCatch, WEEX, and BitMart. These apps are now inaccessible for new downloads and updates in South Korea.

A Push for Transparency and Investor Protection

South Korean regulators have repeatedly warned about the risks associated with unregistered offshore exchanges. These platforms frequently operate beyond the authority of Korean law, exposing consumers to increased fraud risks, a lack of dispute resolution, and insufficient anti-money laundering (AML) safeguards. 

The Financial Services Commission is concerned that unregistered cryptocurrency platforms could be used for criminal financial operations, jeopardizing the country’s efforts to prevent money laundering. To counter this, the South Korean government imposed stringent restrictions in 2021, mandating all bitcoin service providers to work with local banks and obtain an Information Security Management System certification.

Conclusion

Some experts in the sector are concerned that these rules may limit competition and slow innovation in South Korea’s cryptocurrency ecosystem. However, regulators say that prioritizing consumer safety and financial transparency is more important than granting free market access. This isn’t a novel method; South Korea has already banned access to various international platforms between 2021 and 2023, demonstrating its continuous commitment to managing unregistered businesses.

This move suggests that South Korea will further intensify enforcement and digital asset monitoring. South Korean registered exchanges, such as Upbit, Bithumb, Coinone, and Korbit, stand to benefit from less competition, but global exchanges can be required to meet Korean rules or else face exclusion from one of the most valuable Asian crypto markets.