South Korea’s Financial Services Commission (FSC) Prepares to Sanction Upbit

The FSC is poised to announce potential sanctions against Upbit due to the exchange’s inadequate compliance with customer verification requirements aimed at preventing money laundering.

Upbit Sanctions Decision Imminent

FSC Chairman Kim Byoung-hwan stated that the review process is nearing completion, addressing concerns over delays voiced by lawmaker Kim Jae-seop. During a National Assembly session, Kim reassured the public that the FSC is expeditiously resolving the issue, as it could influence market dynamics. He noted that the process has taken longer than anticipated due to numerous meetings with involved parties, but a resolution is expected soon to mitigate potential impacts on Korea’s crypto market.

Related: South Korea Accelerates Crypto Regulations as U.S. Policies Shift

AML Compliance Issues Trigger Scrutiny

The Financial Intelligence Unit (FIU) inspected Upbit during its virtual asset service provider (VASP) license renewal and uncovered multiple suspected violations of anti-money laundering (AML) regulations, particularly in the exchange’s Know Your Customer (KYC) procedures. South Korean law requires financial institutions to verify customer identities using government-issued ID cards to deter illicit activities. Upbit’s verification processes were deemed incomplete, resulting in the identification of hundreds of thousands of suspected breaches.

S. Korea to End Ban on Institutional Crypto Trading

In tandem with these developments, the FSC has revealed plans to lift the longstanding ban on institutional cryptocurrency trading, imposed nearly eight years ago. This policy overhaul, occurring in two phases throughout 2025, aims to meet rising demand for blockchain-based financial products and align with global trends. Starting in the latter half of 2025, institutions such as universities and charities will be allowed to handle crypto donations. Additionally, the FSC plans to implement new guidelines to prevent market manipulation, including stricter listing standards and minimum supply requirements for new crypto assets.

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