South Korea Cracks Down on Unregistered Crypto Exchanges as Market Hits Saturation

South Korea is tightening its grip on unregistered digital asset firms, as its crypto market surges to unprecedented levels of public adoption. In a sweeping move announced by the Financial Services Commission (FSC) on April 11, 14 overseas crypto exchanges,  including major global players KuCoin and MEXC, were officially blocked from operating through the Apple App Store for South Korean users. The decision follows similar restrictions applied to Google Play in March.

The FSC’s report, made public on April 14, identifies these exchanges as unregistered virtual asset operators, effectively operating illegally within the country’s borders. Working in coordination with the Financial Intelligence Unit (FIU), the FSC emphasized its ongoing commitment to preventing money laundering, financial crimes, and protecting consumers from what it calls “user damage.”

This latest ban means users will no longer be able to download these crypto apps from Apple’s store, and existing users will lose access to app updates, effectively cutting them off from critical security patches and new features. The FSC reaffirmed the legal weight behind its crackdown, stating that “unreported business activities are criminal punishment matters,” carrying penalties of up to five years in prison and fines as high as 50 million won (approximately $35,200).

This move isn’t a sudden shift but part of an escalating regulatory campaign. Just weeks earlier, on March 26, Google Play took similar action, blocking access to 17 of 22 unregistered crypto platforms identified by the FSC. The dual-platform blockade underscores the South Korean government’s increasingly aggressive posture toward crypto firms operating without the necessary licenses.

Under current South Korean law, operators offering crypto sales, brokerage, asset management, and custody services are required to register with the FIU and comply with strict reporting and anti-money laundering standards. Any failure to do so triggers sanctions, criminal prosecution, and now, digital access bans.

This clampdown comes at a pivotal moment for South Korea’s crypto market, which continues to boom despite, or perhaps because of , regulatory hurdles. As of March 31, the number of crypto exchange users in the country has surpassed 16 million, representing over 30% of the national population. Industry experts predict this figure could exceed 20 million by the end of 2025, pushing the nation’s digital asset market to a potential saturation point.

In a sign of how deeply crypto has embedded itself into South Korean society, a March 27 report revealed that over 20% of public officials in the country hold cryptocurrency, with total declared holdings reaching $9.8 million. This remarkable statistic highlights not just the retail enthusiasm but also the penetration of digital assets into the highest levels of government.

The South Korean government’s latest actions reflect both a growing concern over financial crime risks in a rapidly expanding market and a clear message: digital asset firms must play by local rules or be locked out of one of the world’s most enthusiastic crypto economies.

As the regulatory landscape continues to evolve, crypto exchanges hoping to access South Korea’s tech-savvy, investment-hungry public will need to adapt or risk being digitally erased.

Thomas Lin
UCW Newswire