Regulatory AlertsSouth Korea: crypto & digital assets regulation
RegulatedVASP licensing via FSC; Act on Protection of Virtual Asset Users effective July 2024
- Lead regulator
- Financial Services Commission (FSC)
- Also involved
- KoFIU (AML/CFT supervision) · Financial Supervisory Service (FSS) (on-site inspections)
- Core law
- Act on the Protection of Virtual Asset Users (2024)
- Entry capital
- KRW 1 billion (VASP)
- Approval timeline
- 6-12 months for VASP registration
- Customer assets
- Segregated in designated banks; >80% cold storage
- Data protection
- Personal Information Protection Act (PIPA) · Personal Information Protection Commission (PIPC)
- Sandbox
- Yes - Regulatory Sandbox
South Korea regulates virtual assets under the Act on the Protection of Virtual Asset Users, effective July 19, 2024. The FSC oversees licensing, while the Korea Financial Intelligence Unit (KoFIU) handles AML/CFT supervision. The regime mandates strict segregation of customer assets and capital requirements for Virtual Asset Service Providers (VASPs). Recent changes include lifting the corporate ban on crypto transactions and establishing a protection foundation for insolvent VASPs.
Which licence do you need?
| Your activity | Requirement | Capital | Timeline | Authority |
|---|---|---|---|---|
| Exchange / trading platform | LicenceVirtual Asset Service Provider (VASP) Registration[1][2] Mandatory registration for domestic exchanges; strict AML compliance required. | KRW 1 billion | 6-12 months | FSC |
| Custody of client assets | LicenceVASP Registration[2] VASPs must store >80% of assets in cold wallets. | KRW 1 billion | 6-12 months | FSC |
| Token issuance / public offering | Uncertainverify with regulator ICO regulations are evolving; specific token classification rules are pending. | — | — | — |
| Broker-dealer / OTC desk | Uncertainverify with regulator OTC desks may require VASP registration if acting as exchange. | — | — | — |
| Stablecoin issuance | Uncertainverify with regulator Stablecoin issuance is not yet explicitly regulated under current VASP framework. | — | — | — |
| Crypto payments acceptance | Uncertainverify with regulator Crypto payments are generally prohibited for merchants; VASP registration may apply. | — | — | — |
| Mining / staking services | Unregulated Mining and staking are not regulated as financial services. | — | — | — |
| Advisory / portfolio management | Uncertainverify with regulator Advisory services may fall under securities laws if involving investment advice. | — | — | — |
New — what changed recently
- 2025-05-02FSC Guidelines on Corporate Crypto Sales — FSC allows non-profits and VASPs to sell virtual assets for operational funding with strict internal controls.[3]
- 2025-02-13Staged Allowance of Corporate Virtual Asset Transactions — FSC approved a phased roadmap to lift the ban on corporate crypto transactions, starting with liquidation purposes.[4]
- 2024-09-25Digital Asset Protection Foundation Establishment — FSC authorized the Digital Asset Exchange Association to set up a foundation to safeguard user funds from insolvent VASPs.[5]
- 2024-07-19Act on the Protection of Virtual Asset Users Takes Effect — The core VASP legislation took effect, mandating asset segregation and capital requirements.[1]
Market-entry checklist
- 1Register as VASP with FSCSubmit application for Virtual Asset Service Provider registration, demonstrating compliance with capital and AML requirements.
- 2Meet KRW 1 Billion Capital RequirementEnsure minimum paid-in capital of KRW 1 billion is maintained for VASP operations.
- 3Segregate Customer AssetsStore over 80% of customer assets in cold wallets and keep deposits in designated banks.
- 4Implement AML/CFT SystemsEstablish robust compliance systems and report to KoFIU as required by the Financial Transaction Reports Act.
- 5Establish Internal ControlsDevelop strict internal control mechanisms for asset management and risk mitigation as per the Enforcement Decree.
Sources
- Act on the Protection of Virtual Asset Users Takes Effect July 19 · 2024-07-17
- New Enforcement Decree on the Protection of Virtual Asset Users Approved by the Government · 2024-06-25
- FSC Allows Non-profit Corporations and Exchanges to Sell Virtual Assets from June · 2025-05-02
- Staged Allowance of Corporate Virtual Asset Transactions by the FSC · 2025-02-13
- Digital Asset Protection Foundation to be Set Up to Ensure Safe Return of User Funds from Closed Down VASPs · 2024-09-25