South Korea raises the bar for crypto exchange licenses and shareholder checks

For years, South Korea has treated crypto exchanges like financial plumbing that needs constant inspection. The latest overhaul pushes that idea further, giving regulators a sharper set of tools to decide who gets to run an exchange and who gets to own one.

The National Assembly approved an amendment to the Act on Reporting and Using Specified Financial Transaction Information, the law that anchors the country’s anti-money laundering framework for digital assets. The measure is expected to come into force six months after it is enacted, leaving a runway for guidance and industry prep. 

A core change is the scope of the background check. The review now reaches controlling shareholders, not just executives and directors. Disqualifying conduct also gets broader. The list extends past classic financial crimes and into areas that regulators argue can signal governance risk, including narcotics trafficking, tax offenses, fair-trade violations, serious economic crimes and breaches tied to the Virtual Asset User Protection Act. 

The Financial Intelligence Unit (KoFIU) also gains more discretion in deciding whether a firm can operate. Beyond criminal history, the agency can look at a company’s financial condition, internal controls, legal track record and the credibility of its filings. A separate provision creates room for conditional approvals, letting regulators attach requirements meant to address money-laundering and user-protection risks. Another tweak closes a gap around former employees. If a person is sanctioned for AML-related violations after leaving a regulated role, KoFIU can notify the business leadership and require recordkeeping around the notice process. 

The timing matters because Korea has already been widening its crypto rulebook. In 2024, the Financial Services Commission rolled out a user-protection law focused on custody, market surveillance, and enforcement powers.

Taken together, the direction is clear: tighter entry standards, more scrutiny of who holds influence, and a licensing process that starts to resemble how traditional market infrastructure is policed. For exchanges, the next milestone will be the FIU’s implementation guidance, plus how lawmakers handle ownership caps that are being discussed alongside the broader Digital Asset Basic Act.