South Korea has approved sweeping changes to its crypto licensing framework, signaling a tougher regulatory stance on digital asset platforms and their owners. The amendments strengthen oversight, expand background checks, and give regulators broader authority over who can operate in the country’s crypto market.
Expanded Licensing and Shareholder Scrutiny
Under the revised rules, regulators will now examine not only executives but also controlling and major shareholders of crypto exchanges. Background checks have been widened to cover serious economic crimes, tax evasion, drug-related offenses, fair-trade violations, and breaches of crypto user protection laws.
Authorities are also empowered to assess a firm’s financial soundness, internal control systems, legal history, and overall credibility, moving beyond narrow compliance checks toward a more holistic review of operational risk.
Conditional Crypto Licenses Introduced
The framework allows regulators to issue conditional operating licenses, enabling exchanges to enter the market while meeting specific requirements related to anti-money laundering (AML) and investor protection. This approach gives regulators flexibility to address risks without imposing blanket bans.
Another key change addresses former financial-sector employees. If an individual is sanctioned for AML violations, regulators must now notify the employer’s chief executive, with firms required to pass on the notice and retain records.
In parallel, authorities are considering ownership caps of roughly 15%–20% for major shareholders, reflecting a shift toward treating exchanges as market infrastructure rather than ordinary private companies.
These reforms are expected to take effect six months after enactment, following detailed guidance from financial regulators.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.