South Korea has ordered domestic access restrictions on 27 unregistered cryptocurrency exchange websites, including major platforms KuCoin, MEXC, Phemex, BingX, and BitMart, following regulatory reviews held on October 6 and 7. According to reports from the Financial Services Commission (FSC), the communications review authority approved these restrictions at the request of its Financial Intelligence Unit (FIU) on October 13. The affected platforms also include XT.com, Bitrue, CoinW, Poloniex, BTCC, and BitMart. As per Etoday, the FIU treats all these platforms as unregistered crypto exchanges since they operate without the required filing, with servers facing service termination while overseas servers face domestic block access. The Korea Communications Standards Commission has now expanded these restrictions to include internet websites, effectively sealing off all access routes to unregistered virtual asset businesses. With this decision, blocks against illegal operators will be implemented not only in apps such as Apple and Google but also on internet sites. The Financial Intelligence Unit (FIU) has also referred 44 unregistered virtual asset operators to investigative agencies, indicating that regulatory action against unregistered operators may continue.
South Korea requires cryptocurrency businesses serving local customers to register with the FIU and meet Information Security Management System (ISMS) certification requirements. Operating without registration carries a possible prison sentence of up to five years or a fine of up to ₹4.25 crore (50 million won). The FIU has referred 44 unregistered virtual asset operators to investigative agencies, though the commission has not confirmed all referrals have resulted in criminal charges or convictions. Licensed firms violating transaction restrictions face administrative sanctions and fines of up to ₹42.5 crore (100 million won) per violation. According to Etoday, registered operators must limit transfers with these platforms, and credit card purchases on them are barred. The Specific Financial Information Act applies equally to overseas operators targeting South Korea, with the FIU prioritizing early blocking of unregistered virtual asset operations before user harm occurs. To legally operate as a virtual asset service provider in Korea, entities must meet requirements such as Information Security Management System (ISMS) certification and file a report with the FIU. The government will also take steps to enforce regulations against any potential substitute domain names that may attempt to circumvent such restrictions.
The FIU has warned that unregistered cryptocurrency businesses are not subject to the same domestic supervision and safeguards required of registered providers. According to the regulator, potential risks include exposure of personal information, hacking, money laundering, and customers paying for cryptocurrencies they never receive. A joint investigation by the Digital Asset Exchange Association (DAXA) and registered operators in June 2026 found trading fees ranging from 1.5% to 10% among unregistered businesses, compared to an average of 0.16% across South Korea's five major won-based exchanges. The commission warned customers to be cautious of promotions promising high returns, principal guarantees, or access to non-public information. Illegal virtual asset operators are not subject to government oversight, leaving institutional safeguards for anti-money laundering systems and user asset protection insufficient. In particular, because they do not meet security requirements, they may be exposed to risks such as personal information leaks and hacking, or be exploited as channels for concealing criminal funds related to drugs and for money laundering. The FIU also plans to work with the Digital Asset Exchange Association (DAXA) to guide users through withdrawal procedures when restrictions cause difficulties, which will be important for customers who still hold funds on affected platforms.
The FIU has urged users holding assets on unregistered platforms to withdraw them immediately and plans to guide customers through the Digital Asset eXchange Alliance (DAXA). In a statement to BeInCrypto, a KuCoin spokesperson said the exchange respects regulations across jurisdictions and that user assets remain safe and secure. MEXC, BingX, Phemex, and BitMart have not yet responded to requests for comment. The FIU plans to seek blocks once they detect unregistered activity, pending the review body's approval, and will no longer wait for court rulings or confirmed user losses. Korean investors paid foreign exchanges an estimated $3.5 billion in fees in 2025, according to Tiger Research, with the firm and Chainalysis estimating about 700 trillion won moved from Korean to overseas exchanges from 2021 to 2026. Net stablecoin outflows from Korea's major exchanges ran for an 18th straight month in June, while crypto on Korean exchanges lost 33% of its market value in the first half of 2026, dropping to 58.9 trillion won. South Korea's crypto crackdown could shift trading activity toward domestic exchanges, where Upbit already dominates the market with 64% of total weekly trading volumes and accounts for nearly 75% of users with assets greater than 1 billion KRW. The weekly trading volumes at the top five won-based exchange platforms hover between approximately 17.4 trillion KRW and 20.5 trillion KRW, with Bithumb second at nearly 27%.
