South Korea’s Financial Services Commission (FSC) is preparing to announce its decision on potential sanctions against Upbit, the country’s largest cryptocurrency exchange, following extensive customer identity verification regulations violations.
According to The Korea Times, an investigation into Upbit’s business license renewal uncovered over 700,000 instances of non-compliance with key anti-money laundering protocols. These violations fall under South Korea’s Special Financial Transactions Act, which imposes fines of up to $68,600 per breach. As a result, the exchange could face penalties amounting to billions of shillings, with possible repercussions including a temporary business suspension of up to six months or restrictions on new user registrations.
Kim Byoung-hwan, governor of South Korea’s FSC, emphasized the case’s urgency, assuring that a final decision would be made swiftly. The outcome is expected to have significant implications for South Korea’s digital asset sector, which has faced increasing regulatory scrutiny since enacting the Virtual Asset User Protection Act in July 2024.
Upbit’s regulatory troubles come amid a broader crackdown on cryptocurrency exchanges in South Korea. The industry has undergone significant reforms since the 2017 Bithumb data breach, which exposed the personal information of over 31,000 users and prompted stricter oversight.
Meanwhile, the FSC recently announced a significant policy shift, signalling a more flexible regulatory approach to digital assets. Under the revised framework, charities and universities will be allowed to sell cryptocurrency donations starting in the second half 2025. Previously, these organizations were restricted from opening accounts on cryptocurrency exchanges, limiting their ability to manage digital asset contributions.
As part of the transition, the FSC planned a phased rollout beginning in early 2025, which would introduce a pilot program granting 3,500 corporations and professional investors the ability to open “real-name” accounts. These investors would later be permitted to sell digital assets, reflecting a broader effort to integrate cryptocurrencies into the traditional financial system.
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