Cryptocurrency regulation has once again taken center stage in South Korea. The Financial Supervisory Service (FSS) issued a formal notice to leading virtual asset companies, urging them to reinforce their internal control systems. The regulator emphasized that market confidence cannot be guaranteed through enforcement alone, underscoring the pivotal role of strong corporate governance structures.
Regulators urge a shift beyond enforcement-driven approaches
On Wednesday, Lee Chan jin, head of the Financial Supervisory Service, convened with executives from 15 major virtual asset service providers. During the meeting, Lee highlighted that robust corporate governance is the foundation for market trust and urged companies to take proactive steps to support sustainable growth in the sector.
Lee Chan jin stressed that confidence in the markets cannot be built solely on sanctions, and that sound governance structures form the essential backbone of trust.
Lee also called on industry representatives to prepare for expected legislative changes. These include a draft law specific to digital assets, revisions to financial information regulations, and updates in foreign exchange legislation. The FSS underscored the need for firms to closely monitor legislative developments and swiftly adapt to new compliance requirements as they emerge.
Glossary: The Financial Supervisory Service is a leading financial regulator in South Korea responsible for supervising financial institutions and overseeing market activity. A virtual asset service provider refers to licensed companies that offer cryptocurrency exchange, custodial, or other related services.
The FSS increased its oversight of the crypto market as of February 2026, stating that these measures should help curb market manipulation and improve investor protection. Enhanced monitoring of suspicious transactions forms a key component of this initiative.
Expanded surveillance to leverage artificial intelligence
The regulator aims to make broader use of artificial intelligence and real-time analytics for market surveillance. According to the FSS, these systems will help detect large-scale transactions, sudden price movements, and coordinated manipulative activity. This signals a shift in regulatory strategy, moving from a punitive model toward a focus on preventive oversight.
Lee noted that the first half of 2026 saw the crypto market display weakness, attributing this to shifting fund flows and recent challenges related to Bitcoin payments. Nonetheless, he added that the long-term outlook for the sector remains robust.
A rise in stablecoin usage emerged as a key indicator pointing to industry growth, according to Lee. He also cited stronger ties between blockchain technology and traditional finance, as well as increased tokenization initiatives, as signs of a more broadly based market foundation.
Meeting participants stressed the urgent need for trading platforms to detect disruptive activity before investors suffer losses.
Industry leaders request gradual implementation of new rules
Executives in attendance committed to strengthening their internal controls and adhering to both statutory obligations and self-regulatory standards. This framework encompasses procedures related to token listings, as well as marketing and promotional activities.
Industry representatives advocated for a phased rollout of new regulations. Officials pointed to significant differences in scale and capacity among companies, warning that uniform requirements could place excessive burdens on smaller players. They also sought targeted policy support to maintain the sector’s competitive edge.
