Lawmakers in South Korea have introduced a legislative proposal to expand the enforcement powers of the Financial Intelligence Unit (FIU), aiming to more effectively target unlicensed cryptocurrency service providers operating in the country.
Bill seeks to strengthen FIU oversight
Representative Eom Tae-young of the People Power Party, with the backing of nine other lawmakers, submitted an amendment to the Act on Reporting and Using Specified Financial Transaction Information. This amendment is designed to give the FIU greater jurisdiction and investigative capabilities over virtual asset service providers suspected of operating without proper authorization.
Under the proposal, any individual could report potential regulatory breaches directly to the FIU. After receiving such reports, the FIU would be empowered to conduct preliminary investigations, analyze suspected violations, and decide whether to file formal complaints, initiate criminal procedures, or forward evidence to relevant investigative authorities.
Currently, South Korea requires all cryptocurrency platforms serving domestic users to register with the FIU. However, the agency largely depends on the police to take action after it identifies unlicensed businesses. The new legislation would expand the FIU’s capacity to act in the earlier stages of enforcement.
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AAPLChallenges with enforcement on international operators
Enforcement remains particularly difficult when service providers are based outside South Korea. Data from August 2022 to August 2025 shows that police closed investigations in 23 out of 25 cases referred by the FIU, with most of these cases involving companies and individuals registered overseas.
The FIU reported in June that 28 virtual asset service providers currently hold active registrations in South Korea. Meanwhile, the regulator has sent roughly 40 suspected unauthorized operations to law enforcement authorities for investigation.
International companies are also required to register with the FIU if they serve South Korean users. Authorities have highlighted several methods used by overseas platforms to reach local customers without proper authorization, including promotions through messaging services like Telegram and KakaoTalk, YouTube content, and digital forums. Some companies also facilitate direct exchanges between cryptocurrencies, Korean won, and other fiat currencies.
Mini dictionary: Financial Intelligence Unit (FIU), a government agency responsible for monitoring financial transactions, enforcing anti-money laundering laws, and preventing illicit activity within the financial sector.
The FIU would receive new authority to investigate reports on unlicensed crypto platforms, allowing officials to carry out their own analysis before bringing in law enforcement or requesting legal action.
Growing regulatory framework for digital assets
South Korea has steadily increased scrutiny over both licensed and unlicensed digital asset operators. Recent proposals have mandated more extensive reporting requirements for domestic exchanges, especially regarding overseas-connected transactions and suspicious activities. Some exchanges have expressed concern that these additional obligations could heavily increase compliance costs.
Judicial reviews have occurred in several high-profile cases involving FIU actions against major South Korean crypto firms. For instance, a Seoul court overturned a partial suspension against Dunamu, the operator of Upbit, recently after allegations relating to unregistered overseas platforms. Exchanges Bithumb and Coinone have also been granted provisional court protections in separate legal challenges.
Further regulations affecting cross-border cryptocurrency transactions will take effect in December. The finance ministry will require firms handling international crypto transfers to register under new foreign exchange compliance rules. The proposed FIU legislation must pass through the National Assembly before its enforcement mechanisms become law.
Authorities have documented various tactics used by international crypto platforms to access South Korean users, such as leveraging messaging apps, video platforms, and forums to sidestep domestic licensing rules.
