Upbit, South Korea’s largest crypto exchange, may face sanctions from the Financial Services Commission for allegedly failing to comply with KYC and AML rules.
Procedural notice and possible consequences
Last week, the platform received a procedural sanctions notice from the FSC’s Financial Information Analysis Institute, according to local media. Upbit must submit a formal argument against the sanction by Jan. 20. The FIU will then review the submitted response and issue a final decision on the matter. If the sanction is upheld, new users on Upbit could be prohibited from withdrawing assets from the exchange for up to six months. Additionally, the platform’s crypto license renewal was suspended last year pending the outcome of an ongoing investigation.
Measures against regulation breaches
The potential penalty is part of a broader effort by South Korean authorities to combat regulatory noncompliance following Terra’s $60 billion ecosystem collapse in 2022. As a result, the FSC ramped up its scrutiny of crypto exchanges and digital asset operators.
Plans for new crypto regulations
South Korea also plans to draft new cryptocurrency regulations by the end of 2025 as part of its efforts to standardize the local digital asset economy. This initiative aims to strike a balance between protecting consumers and supporting businesses. Part of that plan includes easing restrictions on institutional crypto trading and possibly issuing real-name accounts to experienced players.
The situation surrounding the potential penalties against Upbit highlights the tightening regulation of cryptocurrencies in South Korea after Terra’s collapse, prompting authorities to develop new legislative initiatives in this field.
