South Korea’s financial authorities issued guidelines on December 4, 2023 asking users to report unregistered cryptocurrency exchanges operating in their region. This order was created in an effort to control the market. This approach reflects South Korea’s ongoing attempts to simplify digital asset markets and protect investors from risks associated with unregulated virtual asset exchanges.
The driving force behind this effort was Korea’s Financial Intelligence Unit (FIU) and the Digital Asset Exchange Association (DAXA). An important part of the regulatory system is handled by the Digital Asset Exchange Association (DAXA), which consists of the five major digital asset exchanges in Korea (Upbit, Bithumb, Coinone, Korbit, and Gopax). Within the scope of their joint efforts, they seek to identify operators of domestic and foreign virtual asset companies that may target Korean citizens, which may be considered a violation of Article 7 of the Specific Financial Information Act.
DAXA is the first organization to investigate reports of illegal business operations conducted by Bitcoin exchanges. After the results are collected, they are sent to the FIU, which checks the operator’s status and determines any necessary steps. If it is found that the business operators are continuing to conduct undisclosed business, the Federal Investigation Division plans to involve investigative authorities and take necessary action. The public is strongly encouraged to report these businesses using the tip email provided by DAXA. Information transmitted must include relevant company information, grounds for suspicion, and evidence of unreported actions.
South Korea is making broader efforts to strengthen its participation in cryptocurrency businesses, and this new development is part of those larger efforts. As part of its efforts to increase openness, the Democratic Party of Korea demanded that National Assembly candidates disclose their personal cryptocurrency holdings. Additionally, the Financial Supervisory Service announced last October that it is preparing a bill to supplement the Virtual Asset User Protection Act, which was approved in early 2023. This will be an important milestone in how the country approaches cryptocurrency regulation by January 2024.
To demonstrate its commitment to the development of safe and regulated digital asset markets, South Korea has taken a stance on cryptocurrency regulation. The country’s goal is to maintain the integrity of the financial system while protecting investors by carefully monitoring and taking action against cryptocurrency exchanges that are not legally licensed.
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