South Korea is set to take action against several overseas cryptocurrency exchanges for operating illegally within its borders. These exchanges, such as KuCoin, CoinW, Bitunix, and KCEX, have been offering financial services to South Korean citizens without the necessary licenses under the Specific Financial Information Act. The Korea Financial Intelligence Unit (FIU) of the Financial Services Commission has been investigating these platforms and found that they have been targeting Korean users without abiding by the country’s regulations.

KuCoin, the largest exchange among those listed, with a daily trading volume of $850 million, is facing potential sanctions along with other platforms. The authorities have stated that these exchanges failed to provide adequate marketing and customer support to their Korean users. As a result, measures may be taken to block access to these exchanges’ websites with the assistance of the Korea Communications Standards Commission. The FIU has emphasized that actions will be taken within the current year to address these violations.

In the broader context, South Korea is a significant player in the global cryptocurrency market, ranking 19th in the “2024 Global Crypto Adoption Index.” The country’s retail crypto trading volume surpassed $18 billion in December 2024, outpacing its stock market volume by 22%. However, regulatory pressures have led to the closure of several local exchanges recently, with 11 exchanges ceasing operations due to compliance issues over the past year.

Even major exchanges like Upbit and Bithumb have faced regulatory challenges in South Korea. Upbit, the largest crypto exchange in the country, received a suspension notice in January for non-compliance with anti-money laundering policies. The regulatory landscape in South Korea is evolving rapidly, impacting the operations of both local and overseas cryptocurrency exchanges.

As the authorities gear up to crack down on illegal crypto exchanges, this move underscores the growing importance of regulatory compliance in the cryptocurrency sector. With South Korea being a key market for digital assets, ensuring that exchanges adhere to the relevant laws and regulations is crucial to maintaining market integrity and protecting investors. The upcoming sanctions against these exchanges signal the government’s commitment to upholding regulatory standards in the crypto industry, promoting transparency and accountability in the market.