News reports state that about 40 unregistered virtual asset service providers (VASPs) in South Korea have been referred by the Korea Financial Intelligence Unit (KoFIU) to law enforcement agencies.
The unregistered VASPs violated the mandatory registration requirement and rules on asset segregation and AML reporting under the Special Financial Transaction Information Act and the Virtual Asset User Protection Act.
These laws require VASPs to register with the Financial Intelligence Unit, maintain real-name bank accounts, and comply with strict anti-money laundering and investor protection rules.
Regulatory Framework Governing VASPs in South Korea
The primary legal foundation is the Act on Reporting and Using Specified Financial Transaction Information (SFTIA), amended in 2020 to bring VASPs under its scope.
This law requires all crypto exchanges and custodians to register with the Korea Financial Intelligence Unit (KoFIU) and comply with AML/CFT obligations. Failure to register before operating is a criminal offense punishable by imprisonment.
In 2024, South Korea introduced the Virtual Asset User Protection Act (VAUPA), the country’s first dedicated crypto investor protection law.
VAUPA mandates that VASPs segregate customer assets, store at least 80% in cold wallets, maintain insurance or reserves, and prohibits unfair trading practices such as wash trading and insider dealing. Violations can result in fines up to three times illicit profits or prison sentences of up to five years.
An official list of registered VASPs can be found through the KoFIU VASP Register, published by the Financial Intelligence Unit.
As of 2026, around 37 VASPs hold active registration, including major exchanges like Upbit, Bithumb, Coinone, Korbit, and Gopax. Public surveys and press releases from the FSC also provide updated statistics on registered entities.
Status of Crypto Adoption in South Korea
outh Korea has long been one of the most vibrant crypto markets in the world, with adoption levels that consistently rank among the highest globally.
Retail enthusiasm first surged during the 2017 bull run, when “Kimchi Premium”—a phenomenon where Bitcoin traded at a higher price in South Korea than in other markets—became a symbol of the country’s unique demand dynamics.
Since then, crypto has matured from speculative trading into a mainstream financial activity, supported by both retail investors and increasingly by institutions.
As of 2026, South Korea’s crypto exchanges process tens of trillions of won in monthly trading volume, with Upbit and Bithumb controlling nearly 96% of domestic market share. These platforms have become household names, offering not only crypto trading but also staking services, NFT marketplaces, and tokenized investment products.
Retail investors remain highly active, but the demographic has broadened: younger professionals see crypto as part of their investment portfolios, while older investors are increasingly drawn to regulated products like Bitcoin ETFs and tokenized bonds.
Institutional adoption is also accelerating.
In 2025, the government lifted its long-standing ban on corporate crypto investment, allowing companies to allocate up to 5% of shareholder equity annually into digital assets. This policy shift has opened the door for conglomerates and pension funds to explore crypto exposure, signaling confidence in the sector’s long-term viability.
The Bank of Korea has also advanced its central bank digital currency (CBDC) pilot, testing blockchain-based settlement systems with major commercial banks.
Crypto adoption in South Korea is not limited to trading. The country has become a hub for blockchain innovation, with startups developing tokenized real estate platforms, decentralized gaming ecosystems, and AI-driven DeFi applications.
Government-backed initiatives, such as the Digital Asset Innovation Fund, provide grants and support for blockchain R&D, further embedding crypto into the national innovation agenda.
Despite strict regulations, adoption continues to grow because South Korean investors value transparency and security.
The regulatory framework, while demanding, has created a relatively safe environment compared to unregulated markets. This balance of high adoption and strong oversight makes South Korea a unique case study: a nation where crypto thrives under one of the most comprehensive regulatory regimes in the world.
