Legal Update - Crypto Regulations in Korea (July 21, 2026)

Following the suspension of mobile app downloads for unregistered overseas crypto exchanges, procedures and discussions are now underway regarding the blocking of access to their websites in Korea. We provide below an update on the key developments.

1. Overview

Following the recent implementation of measures restricting new downloads and updates of mobile applications operated by unregistered overseas crypto exchanges, Korean authorities are now considering whether access to the websites of such exchanges should also be blocked.

A Korean media reported that the Korea Financial Intelligence Unit (“KoFIU”) had requested the blocking of websites operated by unregistered overseas crypto exchanges, but that no actual blocking measures had been implemented due to delays in the review by the Korea Communications Standards Commission (“KCSC”).

In response, the Financial Services Commission (“FSC”) issued a press release stating that reports suggesting that the relevant authorities were shifting responsibility to one another or intentionally delaying the review were inaccurate. The FSC explained that the authorities were cooperating to ensure both effective access restrictions and the protection of Korean users.

2. Roles of the Relevant Authorities

KoFIU is an agency under the FSC and serves as the principal regulator responsible for supervising crypto service provider registration, anti-money laundering (“AML”) obligations and unregistered crypto business activities under the Act on Reporting and Using Specified Financial Transaction Information (the “Specified Financial Information Act”).

An overseas crypto service provider is, in principle, required to file a virtual asset service provider (“VASP”) report with KoFIU if it conducts business targeting users in Korea. Conducting such business without registration may result in referral to investigative authorities, criminal proceedings and requests to restrict access to the relevant website or mobile application.

The KCSC reviews illegal and harmful information distributed not only through broadcasting media but also over the internet. Following its review, it may issue corrective requests to internet service providers, including requests to delete information or block domestic access to a website.

Accordingly, KoFIU does not itself directly order the blocking of a website operated by an unregistered overseas exchange. KoFIU submits a blocking request based on evidence of unregistered business activities and related violations, after which the KCSC independently determines whether access should be blocked in accordance with its own standards and procedures.

3. Key Points Raised in the Media Article

The media article reported that, although KoFIU had requested the blocking of websites operated by unregistered overseas crypto exchanges, the KCSC had requested additional supporting materials because the evidence of specific illegality was insufficient, thereby delaying the review.

According to the article, the KCSC considered it necessary to examine the following matters:

• Whether the overseas operator was, in substance, conducting business targeting users in Korea;
• Whether Korean-language services, Korean won-related functions or domestic marketing activities were sufficient to establish that the operator was conducting business in Korea;
• Whether domestic marketing activities were carried out by the overseas exchange itself or by a person duly authorized by it;
• Whether blocking the entire website would be disproportionate to the alleged violation;
• Whether blocking access could prevent existing users from withdrawing assets or accessing their accounts;
• Whether it would be appropriate to continue the review while related investigations or other administrative or judicial proceedings were ongoing; and
• Whether regulatory consistency would be maintained in comparison with other overseas operators providing similar services.

The media criticized the prolonged requests for additional materials and inter-agency consultations, arguing that they had prevented effective blocking measures against unregistered overseas exchanges.

4. The FSC’s Response

The FSC rejected the suggestion that KoFIU and the KCSC were shifting responsibility to one another.

According to the FSC, the two authorities are cooperating toward the common objectives of mitigating money-laundering risks arising from unregistered overseas crypto exchanges and protecting Korean users. The authorities are also seeking to identify appropriate targets for access restrictions promptly, while minimizing inconvenience to existing users and preventing financial loss resulting from such restrictions.

The FSC further explained that the KCSC’s reference to the possibility of considering the final outcome of administrative or judicial proceedings did not indicate an intention to suspend the pending review. Rather, it reflected the general principles and procedures applicable under the relevant review rules.

The FSC stated that it and KoFIU would continue to strengthen cooperation with the KCSC and investigative authorities so that access to websites operated by unlawful overseas crypto exchanges could be restricted in a timely manner based on objective evidence.

5. Legal Analysis

The current situation should be understood in light of the different roles and assessment criteria applied by KoFIU and the KCSC.

KoFIU focuses primarily on whether a VASP has violated the registration requirements under the Specified Financial Information Act, as well as the associated money-laundering risks and the need to protect users. By contrast, because website blocking may affect users’ access to information and the ability of existing customers to recover their assets, the KCSC separately examines the specific illegality of each website, the sufficiency of the supporting evidence, regulatory consistency and the proportionality of the proposed restriction.

In particular, the KCSC is not an authority that automatically implements requests made by KoFIU or other government agencies. Even where a government authority requests that access be blocked, the KCSC must objectively review the submitted evidence under its own standards and procedures and independently determine whether the relevant information is legally subject to blocking. The KCSC may also take into consideration the potential consequences of its decision, including claims, disputes or litigation that may be brought by parties affected by the blocking decision.

Accordingly, KoFIU’s determination that a particular overseas exchange is operating as an unregistered VASP does not automatically result in the blocking of the entire website. However, prolonged review proceedings may delay measures intended to protect users from unregistered business activities, which may be viewed as a limitation of the current regulatory framework.

6. Implications: Website Blocking Discussions Following App Store Restrictions

In early 2026, Google and Apple revised their app marketplace policies to restrict new downloads and updates in Korea of applications operated by overseas exchanges that had not satisfied Korean VASP registration requirements. Access to applications operated by major overseas exchanges, including Binance and Bybit, was subsequently restricted.

These restrictions were not based on a review or access-blocking decision by the KCSC. Rather, they were implemented by Google and Apple based on their own policies and their assessment of the Korean regulatory environment. As a result, although new downloads and updates through major app marketplaces were restricted, access through other app marketplaces, previously installed applications or the exchanges’ websites remained available.

The measures currently under discussion before the KCSC are different in nature, as they concern the blocking of access to overseas exchange websites through Korean telecommunications networks. If the KCSC ultimately decides to block the websites of unregistered exchanges such as Binance and Bybit, and other app marketplace operators introduce similar restrictions, Korean users could face multiple layers of access restrictions, including:

• Restrictions on new app downloads through Korean app marketplaces;
• Restrictions on updates to previously installed applications;
• Blocking of access to exchange websites through web browsers;
• Restrictions on server access or key functions through previously installed applications; and
• Restrictions on crypto transfers between Korean-registered VASPs and the relevant overseas exchanges.

A KCSC decision to block website access would not, by itself, automatically remove the relevant applications from every app marketplace or legally require previously installed applications to cease functioning. App marketplace restrictions would generally depend on each operator’s own policies or separate requests and cooperation from the relevant authorities.

Nevertheless, given that downloads and updates of major overseas exchange applications have already been restricted by certain app marketplace operators, a combination of KCSC-imposed website blocking and corresponding measures by other app marketplace operators could result in Korean users being effectively unable to install or update applications operated by unregistered overseas exchanges or access their services through websites.

VEAT Law Firm’s Crypto Advisory Capabilities

Led by Woosuk Song, Senior Foreign Attorney, who previously served as Senior Advisor to Binance Holdings, VEAT Law Firm has actively advised Korean and overseas VASPs and related businesses on VASP registration, AML requirements, whether their activities constitute conducting business in Korea, user protection and regulatory authority engagement.

VEAT has also developed substantial experience in cross-border M&A and corporate advisory matters, as demonstrated by its consistently high ranking among Korean law firms in the Bloomberg M&A League Tables in recent years. In addition, VEAT has significantly strengthened its capabilities in criminal proceedings and financial and administrative regulatory enforcement through the recent recruitment of a former Chief Prosecutor.

Based on this experience, VEAT is well positioned to provide comprehensive legal advice from multiple perspectives on regulatory, corporate, transaction-structuring, administrative investigation and criminal enforcement issues that overseas crypto exchanges may face in Korea.