South Korea: crypto & digital assets regulation

Who regulates

• Financial Services Commission (FSC)

  Primary regulator overseeing the Act on the Protection of Virtual Asset Users, licensing, and policy direction.

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• Korea Financial Intelligence Unit (KoFIU)

  Handles financial crime reporting, AML/CFT supervision, and market surveys of registered VASPs.

  ^[6][7][8]

Core laws & rules

• Act on the Protection of Virtual Asset Users (2024)

  Establishes the legal framework for VASP licensing, user protection, asset segregation, and market order. It mandates that customer deposits be safeguarded in banks and requires strict internal controls.

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• Act on Reporting and Using Specified Financial Transaction Information (2024)

  Mandates VASPs to report detailed compliance systems, major shareholders, and other specified financial transaction information to KoFIU.

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Licensing & registration

• Virtual Asset Service Provider (VASP) Registration

  Entities must register with KoFIU and comply with the Act on the Protection of Virtual Asset Users. Registered VASPs are subject to regular surveys and must maintain strict internal controls and asset segregation. Timeline: Registration and compliance requirements fully effective from July 19, 2024.

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Restrictions & warnings

• VASPs must store over 80% of user assets in cold wallets and keep customer deposits in designated banks. Corporate transactions in virtual assets are generally restricted, with phased allowances for liquidation and specific operational needs.

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• Non-profit corporations and exchanges are permitted to sell virtual assets only under strict internal controls and for specific purposes like asset disposal or operational funding, limited to eligible assets.

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Direction of travel

• The regulatory environment is evolving towards greater institutional integration, with the phased allowance of corporate transactions and the establishment of a Digital Asset Protection Foundation to manage insolvency risks.

  ^[2][3]

• KoFIU continues to monitor market growth and VASP compliance through regular surveys, indicating a focus on maintaining market integrity and user protection as the sector expands.

  ^[6][7]

Sources

1. FSC Allows Non-profit Corporations and Exchanges to Sell Virtual Assets from June · 2025-05-02
2. Staged Allowance of Corporate Virtual Asset Transactions by the FSC · 2025-02-13
3. Digital Asset Protection Foundation to be Set Up to Ensure Safe Return of User Funds from Closed Down VASPs · 2024-09-25
4. Act on the Protection of Virtual Asset Users Takes Effect July 19 · 2024-07-17
5. New Enforcement Decree on the Protection of Virtual Asset Users Approved by the Government · 2024-06-25
6. KoFIU Unveils H2 2024 Survey Result on Virtual Asset Service Providers · 2025-05-20
7. KoFIU Unveils H1 2024 Survey Result on Virtual Asset Service Providers · 2024-10-31
8. Strengthened Reporting Requirements for Virtual Asset Service Providers · 2024-06-24