Korea Cracks Down: Crypto Exchanges and Their Owners Face Tough New Vetting Rules

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South Korea is raising the bar for operating a cryptocurrency exchange. Lawmakers have overhauled licensing rules to tighten entry and expand scrutiny to a firm’s largest investors.

Under amendments passed Thursday, regulators will conduct background checks on both executives and major shareholders.

The list of disqualifying crimes has been widened to include drug offenses, tax evasion, and fair-trade violations, alongside financial crimes.

The country’s Financial Intelligence Unit (FIU) also gains stronger powers to deny licenses. It can now evaluate a company’s overall fitness—including its finances, internal controls, and legal record—before granting approval. The stricter rules are scheduled to come into force after a six-month preparation period.