South Korea Blocks 17 Unregistered Exchange Apps

South Korea's Financial Intelligence Unit has cracked down on foreign cryptocurrency exchanges that operate without registration, blocking 17 mobile apps from the Google Play Store, according to an announcement on 26 March.

The affected exchanges include major international platforms such as KuCoin, MEXC, Phemex, XT, CoinEx, BitMart and Poloniex. This measure prevents South Korean users from downloading these apps, while those who already have them installed will not be able to receive future updates.

South Korea Blocks Access to Unregistered Crypto Apps

The Financial Intelligence Unit (FIU) stated that this new measure aims to prevent money laundering and improve user security by restricting access to platforms without proper regulation.

According to the agency, South Korea requires all cryptocurrency exchanges to register with local authorities before starting their services. This rule also applies to foreign platforms that meet one of the following criteria:

• Provide services with a Korean language interface
• Carry out marketing activities aimed at South Korean users
• Process transactions with the Korean won

Regulators have warned that operators who fail to meet registration standards may face serious legal penalties. Exchanges that operate without registration risk up to five years in prison or fines of up to 50 million won (about $34,150). Foreign exchanges that meet these conditions are considered by the FIU to be operating in South Korea and must therefore comply with local regulations.

The FIU is working with Apple Korea and the Korea Communications Standards Commission to extend these restrictions to Apple's App Store as part of their strategy to tighten control measures. In addition, it is planned to block the websites of unregistered exchanges.

To help South Korean investors verify platform compliance, the FIU offers a public database of registered exchanges. The agency advises users to immediately withdraw funds from platforms not in the database.

Increasing Cryptocurrency Adoption Despite Regulatory Strictness

The regulatory actions against crypto platforms come at a time when South Korea is experiencing widespread adoption of digital currencies. According to data published in local media, South Korea's five largest licensed exchanges surpassed 9.6 million registered users as of December 2023, marking a 52.6 per cent year-on-year growth.

The total value of assets held on crypto platforms exceeded 100 trillion won (approximately $68 billion), highlighting the growing confidence in the market and interest in digital assets.

Older investors represent the fastest growing segment. The number of investors aged 50 to 59 rose to 1.75 million, while the number of over-60s rose from 371,800 to 636,700, an increase of more than 52%. Moreover, among the 9,135 users with more than 1 billion won in cryptocurrencies, more than 50 per cent are over 50 years old, with average assets of 2.15 billion won.

The impact of intensified regulatory measures in South Korea will determine the future of both local and global crypto platforms.