S. Korea to block websites of unregistered virtual asset operators

South Korea's financial authorities will extend their crackdown on unregistered virtual asset operators from mobile apps to internet websites, blocking access even before any user harm is reported.

According to the Korea Financial Intelligence Unit (KoFIU) under the Financial Services Commission, the Korea Communications Standards Commission held two review sessions Wednesday and Thursday and decided to block domestic access to — or terminate service for — 27 websites currently operated by unregistered virtual asset businesses that KoFIU had flagged. Operators with servers or management based in South Korea face service termination, while those based overseas face access blocks.

The decision broadens the scope of online restrictions on unregistered virtual asset operators beyond mobile apps on platforms such as Google and Apple to include websites. Going forward, authorities plan to block website access through a Korea Communications Standards Commission review whenever illegal operations are detected, even without a separate complaint from a victim. Sites that change their addresses to continue operating after a block will also be monitored and flagged for additional review.

"We determined it was necessary to restrict user access before specific harm is confirmed, as operating without registration itself constitutes a violation under the Act on Reporting and Using Specified Financial Transaction Information," KoFIU said.

Virtual asset businesses operating in South Korea must register with KoFIU after meeting requirements including Information Security Management System certification. Foreign operators that run Korean-language websites, conduct marketing targeting Korean users, or support Korean won payments are subject to the same regulations. Operating without registration carries a penalty of up to five years in prison or a fine of up to 50 million won ($37,400).

KoFIU noted that unregistered operators fall outside the oversight framework established under the Virtual Asset User Protection Act and the Act on Reporting and Using Specified Financial Transaction Information, leaving users with comparatively weak protections. Inadequate security measures can expose users to personal data breaches and hacking, and such platforms may also be exploited as channels for concealing criminal proceeds or laundering money.

Users also risk paying for virtual assets that are never delivered, or being charged excessive fees. A June survey by the Digital Asset Exchange Alliance found that the average transaction fee at flagged unregistered operators ranged from 1.5 to 10 percent — up to 62 times the 0.16 percent average charged by the five major Korean won-based exchanges.

KoFIU has been restricting virtual asset transfers to prevent registered operators from dealing with unregistered ones, and has referred firms confirmed to be operating illegally — through complaints, tips and joint investigations with the Digital Asset Exchange Alliance — to investigative authorities. A total of 44 illegal operators have been referred to date. Mobile apps from unregistered operators are already blocked from new installations and updates on domestic app stores including those of Google and Apple.

There are currently 28 virtual asset businesses lawfully registered with KoFIU. The agency urged users of unregistered operators to withdraw their virtual assets and deposits immediately and to refrain from sharing private keys, login credentials or copies of identification documents.

Meanwhile, the government is also tightening foreign exchange oversight of cross-border virtual asset transfers. The Ministry of Economy and Finance has proposed amendments to the enforcement decree of the Foreign Exchange Transactions Act that would bring transfers between domestic virtual asset operators and overseas operators — as well as transfers involving personal wallets — under foreign exchange authority supervision. Information on such transfers will be reported to the Bank of Korea's foreign exchange information network and shared with the National Tax Service, Korea Customs Service, Financial Supervisory Service and KoFIU for use in monitoring illicit fund flows.