Crypto.com's South Korea Launch Stalled by Regulations

Crypto.com’s launch in South Korea has been delayed following regulatory concerns over potential money laundering issues. 

South Korean regulators conducted an “emergency on-site inspection” after detecting problems with Anti-Money Laundering (AML) measures in the information provided by Crypto.com. A spokesperson from the Financial Services Commission (FSC) conveyed to local newspaper Segye Ilbo that materials submitted raised alarms regarding the effectiveness of their money laundering prevention mechanisms.

The FIU, functioning under the South Korean FSC, initiated an urgent inspection at the premises on April 23, merely six days prior to the scheduled commencement of the exchange in the area. 

Crypto.com successfully secured a local VASP (Virtual Asset Service Provider) license in South Korea by acquiring a domestic cryptocurrency exchange named OKBit. Following this, the company announced a postponement of its planned launch set for April 29, opting instead to engage with regulatory authorities to clarify the anti-money laundering (AML) strategies they have implemented. “Entering the Korean market poses challenges for international exchanges, yet we are dedicated to collaborating with regulatory bodies to develop the sector for the Korean audience responsibly,” stated a representative from Crypto.com.

They further emphasized the decision to delay the launch as a strategic move to ensure that Korean regulators are fully aware of the company’s comprehensive policies, procedures, and control systems.

According to upcoming regulations, South Korean financial regulators are set to introduce a ban on the listing of digital assets involved in hacking incidents on local exchanges pending a detailed investigation into the causes. 

Additionally, these new rules will mandate that all international digital assets aiming for listing must provide a white paper or technical documentation tailored to the South Korean market unless the token has been listed on a recognized exchange for more than two years, in which case it might be exempt from this requirement. 

Digital asset issuers who fail to provide key information transparently risk being removed from exchanges. This initiative has been underway since the latter half of 2023, with the Financial Supervisory Service actively seeking input from various stakeholders, including the Digital Asset Exchange Association, to craft these listing guidelines. 

Disclaimer

This article is provided for information only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.