In a move towards total institutional participation in cryptocurrency, South Korea is enforcing stricter anti-money laundering (AML) and know-your-customer (KYC) policies on local crypto exchanges and banks. This move comes ahead of the partial lift of the ban on institutional crypto investment in the country.
Beginning in June, specific non-profit organizations along with registered crypto exchanges will be permitted to sell their cryptocurrencies in South Korea. Non-profit organizations can cash out the crypto they amassed via donations, while exchanges can liquidate user fees collected in cryptocurrency.
The country’s top financial watchdog, the Financial Services Commission (FSC), announced on Tuesday that crypto exchanges and their banking partners must meticulously verify and scrutinize the source and purpose of transactions from new institutional clients.
The reinforcement of KYC procedures aims to safeguard the domestic crypto and fiscal market from potential money laundering threats, highlighted the FSC. In accordance with this objective, the watchdog stated that institutions, including their CEOs, should be closely observed for any money laundering-related activities.
The Korea Federation of Banks along with the Digital Asset Exchange Association (DAXA) is anticipated to circulate these directives to exchanges and banks later this month.
The FSC further disclosed that measures are underway to permit publicly listed companies and professional investor entities to trade on crypto exchanges by the second half of 2025. This will be accompanied by additional anti-money laundering mandates.
South Korea boasts one of the largest spot crypto markets globally. The country’s retail investors are especially keen on altcoins. By the close of last year, South Korea had approximately 9.7 million crypto exchange users, nearly 20% of the total population, per recent FSC data.
In the latter half of 2024, South Korea registered a daily average crypto trading volume of $5.26 billion, with the local crypto market cap swelling by 91% to reach $77.6 billion.
The forthcoming presidential election in June has put crypto in the spotlight, with both major candidates advocating for the reversal of the ban on spot crypto exchange-traded funds.
Disclaimer: This article is for informational purposes only and is not intended as legal, tax, investment, financial, or other advice. The Block operates independently to provide accurate, impactful, and timely information about the crypto industry.
