Crypto.coms South Korea launch hit by regulatory roadblock

Crypto.com previously obtained a domestic virtual asset business license (VASP) in South Korea after acquiring local crypto exchange OKBit.

Singapore-based crypto exchange Crypto.com decided to postpone its South Korea launch after regulators pointed out money laundering anomalies in the platforms data.

South Korean authorities found Anti-Money Laundering (AML)-related problems in the data submitted by Crypto.com and launched an “emergency on-site inspection” to monitor the crypto exchanges activities. An official representing the Financial Services Commission (FSC) told local media Segye Ilbo:

“We found concerns related to the prevention of money laundering activities in the submitted materials.”

The Financial Intelligence Unit (FIU), which operates under the South Korean FSC, launched an emergency on-site inspection on April 23, just six days before the exchanges planned launch in the region.

Crypto.com previously obtained a domestic virtual asset business license (VASP) in South Korea after acquiring a local crypto exchange named OKBit.

The company later confirmed that it would delay the upcoming launch due on April 29 and work with the regulators to explain the AML measures it has set in place.

“Korea is a difficult market for international exchanges to enter, but we are committed to working with regulators to advance the industry responsibly for Koreans.”

“We will postpone our launch and take this opportunity to make sure Korean regulators understand our thorough policies, procedures, systems and controls,” the Crypto.com spokesperson added.

South Korean financial authorities have also planned to prohibit listing digital assets with hacking incidents on domestic exchanges unless the root cause is thoroughly determined through new guidelines in the near future.

The upcoming regulations will also require all foreign digital assets to publish a white paper or technical manual for the South Korean market before being listed. However, tokens listed on a licensed exchange for over two years may not need to meet these new criteria.

Token issuers that fail to adequately disclose essential information will be subject to getting delisted from exchanges. Since the latter part of 2023, the Financial Supervisory Service has been formulating listing guidelines by soliciting feedback from stakeholders such as the Digital Asset Exchange Association.