South Korea orders website blocks on 27 unregistered crypto exchanges, including KuCoin and MEXC, while authorities expand investor protection measures.
South Korea has ordered website blocks against 27 unregistered overseas cryptocurrency exchanges operating without required registration. Platforms such as KuCoin, MEXC, Phemex, BingX and BitMart are all impacted by the restrictions. This could make it harder for domestic users to access these websites and remove their cryptocurrency assets.
South Korea Expands Restrictions on Overseas Crypto Exchanges
The decision was made by the Financial Intelligence Unit (FIU) of South Korea on October 13. The Korea Communications Standards Commission (KCC) approved the restrictions after two review sessions on October 6 and 7, according to Etoday. The measures target websites operated by overseas virtual asset service providers without required registration.
The exchanges affected are XT.com, Poloniex, Bitrue, CoinW, and BTCC. Furthermore, the authorities have singled out KuCoin, Phemex, BingX, MEXC, and BitMart as the platforms targeted. The restrictions are intended to reduce the availability of services that are not registered in South Korea.
The authorities will take different steps according to the location of each website’s server. If the website is hosted in a home country, officials will ask for its termination. In the interim, the authorities will prevent access to websites hosted on foreign servers.
South Korea had previously limited the installation and update of new apps for unregistered exchanges. These measures impacted apps that were sold on the biggest app stores, such as Google Play and Apple’s App Store. Now, website restrictions extend the current measures beyond mobile applications.
The FIU has also referred 44 virtual asset service providers who are not registered to investigative authorities. In addition, the regulators have limited the transfer of virtual assets to these operators by registered exchanges. Authorities have also shut down credit card purchases from unregistered providers of cryptocurrencies.
South Korea Warns Crypto Investors About Registration Risks
Unregistered providers work around key financial reporting and supervision rules, say South Korean authorities. This means that there are more risks for customers regarding security, asset protection and access to funds. However, the restrictions could also complicate withdrawals for existing users.
A joint industry investigation in June revealed big variations in transaction fees. According to the reported findings, fees at identified unregistered providers ranged from 1.5% to 10%. The average fee of the top 5 exchanges in South Korea, which trade in South Korean won, was 0.16%, compared to the average of 0.19% for the top 5 exchanges.
As a result, some unregistered platforms charge fees up to 62 times the domestic average. These statistics show the potential costs users could incur when trading through these services. However, the amount that each platform charges may differ based on the individual transaction.
The FIU will continue to track alternative domains and replacement websites to circumvent the restrictions. If affected exchanges are still running on other website addresses, additional blocks may be requested. This approach seeks to prevent platforms from avoiding restrictions simply by changing their domains.
The government is also to offer withdrawal guidance via the Digital Asset Exchange Alliance (DAXA). The support is intended to assist impacted customers in the process of recovering their current assets. However, it is important that users check official instructions before transferring money or giving out account details.
There are currently 28 virtual asset service providers registered with the FIU in South Korea. Investors were warned to stay away from platforms that guarantee returns, principal protection, secret information, or special global listings. Additionally, the FIU recommended that customers of unregistered services remove their deposits and crypto assets as soon as possible.
