Unregistered cryptocurrency exchanges operating in South Korea may see their services halted as the Korean Financial Intelligence Unit (FIU) takes action against 16 foreign companies.
The Financial Intelligence Unit has notified its investigative authority that 16 virtual asset service providers are doing business without the necessary registrations. Major exchanges, including the likes of KuCoin, Poloniex and Phemex, are listed, along with 13 other exchanges set to be hampered by the Financial Intelligence Unit.
All 16 exchanges allegedly engaged in businesses targeting local consumers by offering websites in the Korean language, running promotional events aimed at Korean consumers and providing credit card payment options for cryptocurrency purchases. All of these activities fall under the Financial Transactions Reporting Act.
The Financial Intelligence Unit has already taken action against unregistered exchanges by reporting a violation of registration duties and intends to inform their counterparts in the relevant countries in which the companies operate. Unregistered entities face five years in prison, a fine of approximately $37,000, and a possible ban on future registration in the country.
Related: Small Crypto Exchanges in South Korea Face Increased Regulatory Heat
A request has also been submitted to the Korea Communications Commission and the Korea Communications Standards Commission to block local access to the websites of the respective exchanges.
Credit card service providers have been asked to identify and block cryptocurrency purchases made with credit cards. The Financial Intelligence Unit also issued a requirement for the country’s registered exchanges to suspend transactions from 16 unregistered firms in a bid to limit transfers to other platforms.
In July, the South Korean Financial Services Commission announced a deadline for domestic and foreign crypto-related companies to register with relevant authorities. September 24 is the deadline for companies to register before they are subject to criminal prosecution and the potential fines and penalties mentioned earlier.
While the Financial Intelligence Unit is targeting unregistered exchanges, the FSC has pledged to expedite the review of 13 different crypto-related bills under consideration by the South Korean National Assembly. Efforts are being made to pass legislation that has a balanced approach to blockchain development, investor protection and market stability.