South Korea’s top financial regulator is signaling a potential policy shift that could allow foreign investors to access the domestic cryptocurrency market, provided that local exchanges meet strict anti-money laundering (AML) requirements.
Speaking at a seminar hosted at the National Assembly on Wednesday, Kim Sung-jin, head of the virtual asset division at the Financial Services Commission (FSC), expressed support for permitting overseas participation in South Korea’s crypto ecosystem.
According to local media outlet Bloter, Kim said he “agrees with” the idea of opening the market to foreign investors and noted that the commission is exploring methods to attract global capital.
Foreign Investors Still Locked Out of Korean Crypto Market Due to Strict KYC Rules
Currently, foreign investors are barred from trading on South Korean crypto exchanges due to stringent know-your-customer (KYC) regulations.
These include a requirement for users to link their exchange accounts to local bank accounts registered under their real names—a policy that excludes non-residents.
“Korea imposes capital account restrictions — control over portfolio investments,” said Peter Chung, Head of Research at Presto Research.
“Allowing foreigners to trade crypto on Korean exchanges would mute such restrictions.”
South Korea’s potential policy shift comes amid growing global competition in crypto innovation, particularly led by the U.S. under President Trump’s administration.
Chung believes that opening the market could energize South Korea’s crypto sector and support the expansion of USD-based stablecoins in the region.
Additionally, it could help eliminate the so-called “Kimchi Premium”—a phenomenon where cryptocurrencies trade at higher prices on Korean exchanges due to limited foreign liquidity.
However, regulatory readiness remains a key hurdle. South Korean regulators have long voiced concerns about the AML capabilities of local exchanges.
Kim’s remarks suggest that while the FSC is open to change, it will only proceed if exchanges can prove robust compliance.
In March 2022, South Korea implemented the Travel Rule, an AML measure aligned with the Financial Action Task Force (FATF) guidelines.
This rule requires exchanges to collect and retain information on both senders and recipients of crypto transfers exceeding one million won (approximately $680).
Major exchanges have since announced plans to extend the Travel Rule to smaller transactions.
Upbit Faces Regulatory Scrutiny Over Foreign Transactions, Fine Suspended by Court
Despite regulatory efforts, challenges persist.
Earlier this year, the Financial Intelligence Unit imposed a fine on Upbit, the country’s largest exchange, for allegedly processing transactions with unregistered foreign platforms. The penalty has since been put on hold following a court injunction.
More recently, South Korean prosecutors launched a formal investigation into Bithumb, one of the country’s largest cryptocurrency exchanges, over allegations that company funds were misused to facilitate an apartment purchase for its former CEO.
The Seoul Southern District Prosecutors’ Office also executed a search and seizure operation at Bithumb’s headquarters in Yeoksam-dong.
Authorities suspect that Bithumb provided a 3 billion Korean won (approximately $2.4 million) lease deposit for an apartment in Seongsu-dong to its former CEO and current advisor, Kim Dae-sik.
South Korea remains a major player in the global crypto space, with March data showing that Upbit alone handled over $85 billion in trading volume.
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