South Korea to ban unfit exchanges as it ramps up digital asset scrutiny

South Korea’s crackdown on digital asset exchanges intensifies as it plans to ban inadequate platforms and increase scrutiny on virtual asset service providers (VASPs). The Korean Financial Intelligence Unit (KoFIU), which became the digital asset watchdog in 2021, will thoroughly examine exchanges in the first half of the year as their licenses expire in the second half. KoFIU’s investigations will focus on exchanges’ anti-money laundering programs, operational capacity, consumer protection measures, and compliance with the upcoming Virtual Asset User Protection Act. Korean regulators, including the Financial Services Commission, are also proposing stricter regulations, such as vetting VASP executives and imposing harsh penalties on digital asset criminals. One of the first exchanges to potentially face the consequences of these regulations is OKX, under investigation for allegedly promoting its platform to Korean investors without a license.