South Korean lawmakers have submitted a bill designed to strengthen the Financial Intelligence Unit’s (FIU) role in investigating unregistered cryptocurrency businesses operating within the country. The new proposal marks a significant step towards tightening oversight of the digital asset market and improving the regulatory structure for crypto operators.
Bill targets unregistered crypto operators
People Power Party lawmaker Eom Tae-young, together with nine colleagues, introduced the legislative proposal on Thursday. The draft amendment seeks to add a new article to the Act on Reporting and Using Specified Financial Transaction Information, focusing on virtual asset service providers that fail to register with South Korea’s authorities.
The new provision enables any individual to submit reports of suspected legal breaches connected to unregistered crypto businesses directly to the FIU. The agency would then have the power to investigate the claims, review evidence, refer cases to competent authorities, and request criminal probes where necessary.
Currently, the bill has only been introduced and will require approval by the National Assembly before it can come into effect. The legislative process is expected to spark further discussions within both government and the financial sector about how best to close regulatory gaps in the country’s digital asset ecosystem.
ETH
SOL
BSC
ROBINHOOD
USDT
AAPLCurrent challenges in enforcement
Under existing regulations, the FIU identifies operators suspected of running unregistered cryptocurrency services but largely depends on law enforcement agencies to conduct full investigations. This reliance has led to delays and, in some cases, a lack of follow-through on earlier referrals.
Data from Yonhap indicated that police either suspended or failed to launch full investigations into 23 out of 25 unregistered virtual asset service providers named by the FIU from August 2022 to August 2025. Most of these companies and individuals were reportedly based overseas, complicating enforcement efforts further.
Crypto companies offering services to South Korean users are mandated to complete registration with the FIU. As of June, the regulator had recorded 28 active providers that fulfilled these requirements, while 40 suspected illegal operators were referred for further investigation.
Broader market shift and regulatory focus
Crypto’s growing profile in South Korea has prompted authorities to step up regulatory supervision and close loopholes that allow foreign and unregistered operators to reach local consumers. In June, the FIU reported that 28 crypto service providers were officially registered, highlighting ongoing efforts to keep track of legitimate market players.
At the same time, South Korea recently lowered the threshold for enforcing the Travel Rule in crypto transfers, signaling a more proactive stance on compliance and user safety. These steps reflect a broader global tendency among regulators to seek stronger checks on unregistered digital asset businesses, especially as the sector continues to evolve.
While authorities focus on expanding direct oversight, the market is also witnessing rapid transformation. Wall Street is shifting toward Web3, as investors increasingly use platforms such as 1stepSwap to hold shares of major U.S. companies, gold, and silver directly in their crypto wallets. The process of tokenizing real-world assets (RWAs) and finding optimal market prices instantly removes the need for traditional intermediaries.
Lawmakers argue that granting the FIU expanded investigative powers would help prevent abuse and enhance protection for investors in the domestic digital asset space. However, the proposed changes underline the challenges of keeping up with technological advancements and the borderless nature of the crypto industry.
