South Korea to block foreign crypto exchanges lacking permit

South Korea mandated in 2021 that cryptocurrency platforms must receive Information Security Management System certification. PHOTO: REUTERS

SEOUL (BLOOMBERG) - South Korea plans to block domestic access to foreign cryptocurrency exchanges that lack the proper registration to operate in the country and could launch a probe into the companies.

An intelligence unit of the Financial Services Commission has reported 16 foreign crypto businesses to the nation's investigative body and asked other agencies to block access to the firms' local websites, according to a statement on Thursday (Aug 18).

The statement listed the companies as KuCoin, MEXC, Phemex, XT.com, Bitrue, ZB.com, Bitglobal, CoinW, CoinEX, AAX, ZoomEX, Poloniex, BTCEX, BTCC, DigiFinex and Pionex.

Officials intend to report violations to the countries where the companies originate from and will seek to isolate them from the rest of the local cryptocurrency sector if they fail to get the requisite permits.

People operating unregistered, illegal businesses face prison terms of as long as five years or fines of up to 50 million won (S$52,400), according to the statement. They can also be banned from registering a company for a certain length of time.

South Korea last year mandated that cryptocurrency platforms must receive Information Security Management System certification.

Since then, more than half of the nation's crypto exchanges have ended operations. Currently, 35 virtual asset service providers are registered as legal platforms in the country, according to the government.

Officials around the world are tightening scrutiny of the crypto sector after a rout in prices this year caused a number of blow-ups. That included the US$40 billion (S$55.4 billion) wipe-out in South Korean entrepreneur Do Kwon's Terraform Labs ecosystem, which saw the TerraUSD stablecoin unravel.

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