This development happened amid the push made by South Korea to urge the Financial Action Task Force (FATF) to tighten international crypto regulations for all countries that belong to the group, making the domestic action part of a broader campaign that could reshape compliance costs for exchanges worldwide. According to the law on Specified Financial Transaction Information, all platforms carrying out their crypto operations within the country should be certified through the Information Security Management System (ISMS) and registered with the FIU.

The same rule applies to all foreign firms providing services to citizens of South Korea. There are only 28 organizations that have fulfilled these criteria, as stated by Chosun Ilbo. Every other provider offering services to domestic customers is operating illegally. The FIU outlined several evasion tactics it uncovered during its review. Some offshore platforms ran Korean-language marketing campaigns on Telegram and KakaoTalk to recruit local users, then routed customer support through English-only channels to obscure the fact that they were doing business inside the country.

South Korea cracks down on 40 illegal VASPs

According to the authorities in South Korea, private money changers were also found converting stablecoins into won for international students, tourists, and foreign workers residing in South Korea. In other cases, YouTubers accepted fixed payments from overseas exchanges to promote their platforms to Korean audiences. Those not registered under the existing system are not covered by the Virtual Asset User Protection Act and the Specified Financial Transaction Information Act.

Consequently, these platforms make users susceptible to data breaches, hack attacks, loss of funds, and exit scams without much chance of getting their losses back, based on the FIU’s investigation. The timing of this news is no coincidence. FIU Director Lee Hyung-joo had just attended the 34th FATF plenary session in Paris, where he made an appeal to all member countries to remove any transaction threshold amount from the crypto Travel Rule. In fact, South Korea intends to apply the identity verification process to all transactions regardless of their value by reducing the current 1 million won ($730) threshold to zero in August.

Lee said that having different rules for licensing and supervising exchanges in different jurisdictions leads to regulatory arbitrage, which hampers the effectiveness of anti-money laundering (AML) and counter-terrorism financing efforts. In case other members of FATF follow suit with Seoul, then all the world’s exchanges will have to have the necessary infrastructure for carrying out ID checks on micropayments, a costly operational shift.

The preliminary review conducted by the FATF confirmed Seoul’s position: jurisdictions where most virtual asset trades take place are least compliant with FATF’s AML standards for crypto. The referrals become another addition to a series of enforcement actions conducted in 2026. As reported by Compliance Corylated, in January, the Financial Services Commission brought a criminal case for the violation of the Virtual Asset User Protection Act against an individual who was reportedly running a pump-and-dump scheme.

The suspect made a profit from rapidly buying up certain tokens and then dumping his holdings within minutes; this way, he earned several hundred million won within one month. As part of an accord signed in March by South Korean officials, the Financial Supervisory Service, Korea Customs Service, and nine credit card issuers agreed to coordinate the exchange of transaction data in real-time and stop the illegal exchange of money using overseas credit cards, as reported by Cryptopolitan.

The post South Korea clamps down on unregistered crypto operators first appeared on Coinfea.

According to previous reports, companies like Ripple, Cosmos Labs, and Tether have also been looking to get on the moving train. In its official announcement, a16z stated that it chose to launch its first Asian office in Korea after evaluating the country’s technical workforce, consumer adoption rates, and competitive position across multiple industries ranging from AI and manufacturing to defense and content. The company first announced plans to expand into Asia in December 2025.

a16z makes inroads into Asia with Korean office

In its announcement, a16z noted that roughly one in three Korean adults holds crypto, representing a participation rate that is higher than the stock-market ownership in the country. The firm noted that South Korea is the “second-largest crypto market” globally by trading activity. Other major crypto firms have been making similar expansions into Korea over the past two months. For instance, Tether filed seven trademark applications with Korea’s intellectual property office in May.

In addition, Circle CEO Jeremy Allaire toured Seoul, meeting executives at KB Financial Group, Shinhan Financial Group, and Hana Financial Group, while Ripple signed pilot programs with KBank, a local financial institution, back in April. Cosmos Labs acquired the Mintscan blockchain explorer and set up a Seoul subsidiary the same month. Korea is also preparing its Digital Asset Basic Act that will require foreign stablecoin issuers to maintain domestic branches if they want to distribute tokens locally.

By establishing a physical presence now, a16z is positioning itself and its portfolio companies to comply with these rules before they officially take effect. a16z has shared that its Seoul operation will start with crypto-focused work and then widen its scope over time. Sungmo Park, who joined a16z as its crypto Asia-Pacific go-to-market lead when the Asia expansion was announced in December, will run the Seoul office. Park previously held APAC roles at Monad Foundation and Polygon Labs and speaks Korean, Japanese, Chinese, and English.

Unlike Circle, which has signed partnerships with exchanges Dunamu (operator of Upbit) and Bithumb while telling Korean media it would seek a local subsidiary and license, a16z does not require a license, nor does it intend to launch a product. Instead, it is building go-to-market infrastructure so its existing portfolio companies, which span crypto protocols, infrastructure, and applications, can reach Korean users and partners more easily.

Due to South Korea’s proposed Digital Asset Basic Act, a lot of foreign crypto firms are already jockeying for a position in the country. Also, the firm is yet to disclose which portfolio companies will be first to use the Seoul office for market entry, but Park’s mandate covers all of Asia-Pacific, so the office could also serve as a staging point for expansion into Japan, Singapore, and India, all markets a16z flagged as high-growth in its December announcement.

The post a16z expands its operation to Asia with its new South Korean office first appeared on Coinfea.

The development is in line with mounting pressure on legislators to review the tax system due to concerns about investor effect, market circumstances, and fairness. According to crypto investors, the proposed tax structure unfairly targets owners of digital assets while treating traditional financial investors more leniently.

The petition claims that South Korea has already eliminated taxes on stock and bond investments, leading many traders to believe the country’s crypto policy is inconsistent. Authorities plan to introduce a 22% tax on Bitcoin revenue exceeding 2.5 million Korean won, or around $1,650. However, due to ongoing criticism and infrastructure issues, the administration has already postponed the initiative three times.

South Korea set to review crypto tax after public pushback

Originally scheduled to take effect in January 2025, the bill was postponed for 2 years after a bipartisan agreement was reached in December 2024. South Korea is one of the biggest retail cryptocurrency markets in the world, with an estimated 13 million virtual asset investors. According to critics, the government abandoned plans to introduce a financial investment income tax on stock gains in December 2024.

According to reports, this was due to strong opposition from ordinary investors and concerns about a market downturn, rendering the decision to tax profits from digital assets unjust. “This issue goes beyond a simple debate over tax rates and reflects broader concerns about how Korea intends to foster the future digital asset industry,” the petition read. It also argued that taxing cryptocurrency assets in the absence of adequate investor safeguards and international norms could deter investment and undermine the domestic cryptocurrency market.

According to the National Assembly of South Korea’s public petition portal, the planned cryptocurrency tax structure in SK does not adequately account for investor losses. It could result in tax burdens even when traders are still recuperating from downturns. Many experts believe the government should focus on promoting innovation rather than increasing tax pressure. Industry leaders argue that blockchain technology could improve South Korea’s digital economy in the future. They also caution that overly strict regulations could drive talent and investment outside.

Some investors have cited foreign instances of investment-promoting regulations, such as the United States, where long-term holdings are subject to lower tax rates based on income levels. Despite regulatory uncertainty, retail and institutional interest in major cryptocurrencies continues to grow. Adoption of Bitcoin has been continuously rising, while tokens tied to AI and Ethereum have also grown in popularity. The crypto market in South Korea remains one of the most active digital asset ecosystems in the world despite legislative uncertainties.

According to research firm Kaiko, trades denominated in won have accounted for almost 30% of the global spot cryptocurrency volume thus far in 2026. The weekly turnover on SK exchanges exceeded $26 billion, driven by retail activity on two domestic platforms, Bithumb and Upbit. In the first half of 2025, Upbit alone had an average daily trade volume of around $3.36 billion, while Bithumb processed about $1.2 billion daily. From 2024 to 2026, Upbit and Bithumb combined accounted for the majority of Korea’s average weekly cryptocurrency turnover.

The post South Korea set to review crypto tax after growing backlash first appeared on Coinfea.

The pilot began on May 21 and covers online, in-store, and app-based transactions. Settlements are complete in under two seconds, marking a major trial for blockchain payments in South Korea.

Avalanche Network Powers Payment Trial

NHN KCP, one of South Korea’s largest payment companies, developed the system with Ava Labs. The company processed ₩51.5 trillion, or about $38 billion, last year. Its test uses a dedicated Avalanche Layer 1 for payment infrastructure.

The pilot operates inside NHN KCP’s headquarters, where about 700 employees use stablecoins at checkout. Users scan QR codes during checkout, and the system completes settlement almost instantly. The structure gives the company a controlled setting to test speed, reliability, and merchant usability.

The payment trial connects with PAYCO, a popular South Korean payment app. PAYCO users can buy and redeem gift certificates through stablecoins. NHN KCP has introduced a dashboard that allows merchants to track transactions and settlements in real time.

Smart contracts automate settlements between merchants and the payment processor. NHN KCP told local media that it plans to build a full-stack payment solution across online, offline, and merchant transactions.

Asian Institutions Expand Avalanche Usage

The NHN KCP pilot adds to a broader wave of Avalanche adoption across Asian payment and settlement markets. Institutions in Japan, Singapore, Thailand, and South Korea now use Avalanche infrastructure for stablecoins, tokenized assets, and cross-border payments.

In Japan, TIS has launched its Multi-Token Platform on Avalanche. The company processes about half of Japan’s credit card transactions. Progmat plans to move more than $2 billion in tokenized real estate and bond assets from Corda to its own Avalanche Layer 1 by June 2026.

SMBC is exploring continuous global stablecoin transfers through Avalanche. In Singapore, StraitsX operates a dedicated Avalanche Layer 1 for regulated stablecoins XSGD and XUSD. Its partnerships with Grab and Alipay Plus aim to support stablecoin payments across Southeast Asia while hiding blockchain functions from users.

Thailand’s Orbix Technology, a KBank subsidiary, has launched cross-border QR payments between Thailand and Singapore. The system uses Avalanche rails for instant foreign exchange settlement. In South Korea, KB Kookmin Card is building a model that links credit cards with digital wallets.

Regulation Shapes Commercial Timeline

NHN KCP’s wider rollout depends on South Korea’s Digital Asset Basic Act. Lawmakers continue to draft the framework, which will define licensing rules for stablecoin issuers and distributors.

The debate has moved beyond the June 3 local elections. The Financial Services Commission plans a gradual approach, starting with strict requirements for regulated entities. NHN KCP has filed trademarks for KRW-pegged and USD-pegged stablecoins, including USDW.

The post South Korea’s NHN KCP Tests Avalanche Stablecoin Payments first appeared on Coinfea.

The company recently revealed that it had a consolidated revenue of 234.6 billion won ($156 million) for Q1, down 55% from 516.2 billion won ($345 million) a year earlier. The company’s net profit fell by the same 78% margin to 69.5 billion won ($46 million), down from 320.5 billion won ($214 million) in Q1 2025. So far, the decline has been attributed to a “decrease in virtual asset market trading volume.” About 97% of Dunamu’s revenue is derived from transaction fees, making any reduction in trading activity an issue for the company.

Dunamu explains the reasons for the drop in trading volume

Dunamu also mentioned that customers are depositing less money. The company held approximately 5.199 trillion won ($3.4 billion) in client funds at the end of Q1, an 11% decline from December 2025. The South Korean market is migrating from digital assets to local stocks, especially those linked with the AI boom. This trend can be observed in the KOSPI 200 index, which has surged over 200% in the last year.

At the close of 2025, Dunamu reported 13.17 trillion won ($8.81 billion) in total assets and generated 709 billion won in net profit alongside 1.56 trillion won in full-year revenue. Dunamu has been required to file quarterly and annual reports with regulators since 2022, when it crossed the threshold of 500 shareholders per security class. Despite the drop in the exchange’s profits, Hana Bank has confirmed that it will purchase a 6.55% stake from Kakao Investment.

The development makes it Dunamu’s fourth-largest shareholder. The partnership involves co-developing digital financial products, including stablecoin initiatives, and extending their existing cooperation beyond providing fiat banking rails for Upbit users. The declining revenue is not the only pressure facing Upbit and other South Korean crypto exchanges. Cryptopolitan has previously reported on regulatory pressure facing Korean exchange operators.

South Korean authorities have been pushing platforms to dilute major shareholder concentrations and improve corporate accountability. The Financial Services Commission mandated earlier this year that major exchanges reconcile internal ledgers with actual crypto holdings every five minutes and submit to inspections every six months rather than annually, following operational failures at multiple institutions.

The Hana Financial stake acquisition still requires standard regulatory approvals. Separately, Naver Financial disclosed plans in November 2025 to acquire Dunamu as a wholly owned subsidiary through a share swap, though the status of that arrangement alongside the Hana deal remains unclear. Korean regulators are also preparing a 22% crypto gains tax effective January 2027, which could further reduce retail trading volumes that exchanges like Upbit depend on.

The post Dunamu attributes drop in Q1 profit to decline in trading volume first appeared on Coinfea.

Stolen crypto is almost impossible to recover, and South Korea has learned this lesson the hard way. FSI announced that it will build automated smart contract auditing tools following a long list of embarrassing security failures by Korean authorities. For instance, Cryptopolitan reported in February that the NTS itself accidentally published an unredacted wallet recovery phrase in a press release, leading to the theft of roughly $4.8 million in crypto tokens within hours.

South Korea to improve crypto monitoring

According to reports, Seoul’s Gangnam Police Station lost 22 Bitcoins worth over $1.4 million from a cold wallet that had been in custody since 2021. The disappearance was only discovered when 320.8 Bitcoins worth over $21 million were lost to a phishing attack at the Gwangju District Prosecutors’ Office. The FSI, led by director Park Sang-won, now plans to build software that automatically detects vulnerabilities in smart contracts used by tokenized securities and stablecoins.

The FSI will also publish a “Smart Contract Security Guide” for financial companies and train security specialists across the Korean financial sector. Beyond the FSI, South Korea’s Financial Services Commission (FSC), after Bithumb’s February payout error, where an employee mistakenly sent Bitcoin worth roughly $40 billion to customers instead of Korean won, mandated that all major exchanges reconcile internal ledgers with actual crypto holdings every five minutes.

Exchanges must now halt trading automatically when mismatches are detected, appoint a Risk Management Officer, and submit to inspections every six months rather than annually. Days before the Financial Security Institute’s announcement, South Korea’s National Tax Service started building an AI surveillance system at the Seoul Regional Tax Office with a budget of roughly $2.2 million.

Cryptopolitan reported that the system will pull transaction records from exchanges like Upbit and Bithumb and combine them with on-chain blockchain data. The AI will then flag suspicious patterns, including money laundering, unreported gifts, and offshore tax evasion. The system will also track non-custodial wallets. The plan is to track all the routes South Korean traders use to hold and trade the digital assets they own.

Ministry of Economy and Finance confirmed earlier this month that a 22% tax on crypto gains will take effect in January next year. The tax applies to annual gains exceeding 2.5 million won (roughly $1,800). Moon Kyung-ho, director of the ministry’s income tax department, said final tax guidelines will be ready by the end of 2026. Meanwhile, data submitted by Upbit, Bithumb, Coinone, Korbit, and Gopax to lawmaker Ahn Do-geol shows that the total value of crypto assets held by over 10 million South Korean investors on those exchanges dropped by 37.5% to roughly $51.02 billion.

The post South Korea ramps up crypto monitoring with new tools first appeared on Coinfea.

According to South Korean prosecutors, Delio marketed itself as a high-yield crypto platform, offering returns of up to 10.7% on deposits of bitcoin, ether, and other tokens. It appeared to be a stable way to earn passive income for many people. But the company was far more fragile, according to prosecutors. A large portion of customer assets had been placed with FTX, whose collapse in late 2022 sent shockwaves through the global crypto market. When FTX went bankrupt, those funds became largely unrecoverable.

South Korean prosecutors push for penalty as Delio denies wrongdoing

South Korean prosecutors allege Delio continued promoting its services and failed to disclose growing risks to customers. In June 2023, Haru Invest halted withdrawals. Panic spread quickly, and users rushed to pull out their funds. Days later, Delio froze withdrawals, and after a couple of months, the company had shut down entirely. Authorities say Jung misled investors for a long time.

South Korean authorities also alleged that Jung submitted a falsified audit report that overstated the company’s crypto holdings by tens of billions of won. The fake report helped Delio secure regulatory registration and build trust with users. Prosecutors say more than 2,800 investors were affected. Jung denies all charges, and his legal team argues the collapse was caused by external shocks in global crypto markets, not deliberate wrongdoing.

The case comes at a time when South Korea is tightening oversight of digital assets. Under the Virtual Asset User Protection Act, which took effect in 2024, authorities now enforce stricter rules on custody, disclosures, and investor protection. Recent cases suggest courts are willing to impose tougher penalties. In one case involving Bitsonic, a CEO received a seven-year sentence for fraud.

Investigations tied to the collapse of TerraUSD and Luna have also signaled a more aggressive approach by prosecutors. If granted, the 20-year sentence requested in the Delio case would rank among the harshest penalties yet in South Korea’s crypto sector. Delio’s collapse shows deeper vulnerabilities in the crypto market. Macro strategist Lyn Alden has emphasized bitcoin’s sensitivity to global monetary conditions, writing that it is “a global liquidity barometer,” showing changes in money supply and financial conditions.

Similarly, investor Raoul Pal has stressed the importance of liquidity in crypto markets. He said, “Liquidity is currently the most important macro factor,” because changes in liquidity drive market cycles. The mismanagement of users’ funds played a role in the collapse of the Delio exchange. But crypto market forces can amplify the speed and/or scale of collapses. A Seoul court will decide whether Jung receives the full 20-year sentence. The outcome may bring some measure of accountability and could set a precedent in the industry.

The post South Korean prosecutors seek 20-year sentence for Delio CEO first appeared on Coinfea.

The development was reported by The Chosun Daily on Thursday, with the outlet claiming that these zones will receive support in key areas, including financial, talent, infrastructure, and taxation. President Lee said the move is crucial to secure Korea’s global competitiveness as a trading nation. From the meeting held on Thursday, the administration wants these zones established quickly. The government wants to enact the “Mega Special Zone Special Act” this year, with the “highest level of regulatory exceptions.”

South Korea to enhance robotics and other sectors

According to reports, the President Lee administration plans to get all the ministries involved to shorten the administrative period in processing the Act. They also deliberated on the idea of having a “czar” to oversee these mega zones. The President is also committed to waive off regulatory hurdles that weaken Korea’s competitiveness in robotics and other sectors on the global stage. In the meeting, he announced plans to adopt negative regulations for advanced industries, covering robotics.

Under such a regulatory environment, Korean robotics companies and other industries covered will be permitted to engage in any activity provided it’s not explicitly prohibited by existing laws. This is more like saying don’t wait for permission, act now. “When public officials set rules saying, ‘just do this,’ the field must change regulations, obtain permits, and in the process, we lose competitiveness,” the President said.

Notably, there have been previous efforts by past administrations to introduce a similar regulatory approach. But it faced opposition and inter-ministerial conflicts. The present administration bets it will be a different case, with President Lee acting as the “regulatory control tower.” “If the committee concludes that a reform is necessary but a ministry claims it’s impossible, report it to Cheong Wa Dae. I will resolve it,” the President said during the meeting.

The reform could spell a boon for the Korean robotics industry, which has since sought regulatory polices to tackle the flood of low-cost robots from China and Japan affecting local firms. Last year, HD Hyundai Robotics and four other Korean companies filed anti-dumping complaints, accusing Japanese and Chinese suppliers of products nearly 60% cheaper than locally-made ones, making it unfair for local suppliers to compete.

In respect to the complaints, Korea Trade Commission (KTC) imposed antidumping duties as much as 15.96-19.85% on Chinese robots and 17.45-18.64% on Japanese robots, Cryptopolitan reported on March 26th, 2026. South Korea, meanwhile, is one of the largest markets in terms of operational stock of industrial robots. The country has 391,900 operational units, the fourth-largest, led by China, Japan, and the United States.

The post South Korea announces mega special zone for robotics first appeared on Coinfea.

South Korea has continued to prioritize blockchain technology, with the Ministry of Economy and Finance announcing a new pilot project just days after Cryptopolitan reported that the nominee for the central bank governor insisted on a bank-led digital currency model. The pilot project involves the government officially using blockchain-based “deposit tokens” to pay for government ministry business expenses. Currently, government officials use state-issued credit or debit cards (government purchase cards) to pay for business trip expenses or operational costs. However, the Ministry of Economy and Finance believes this system is outdated.

South Korea to implement a new tech to watch spending

The new pilot, approved under the 2026 regulatory sandbox program, will replace these plastic cards with digital tokens issued by commercial banks. Previously, the Ministry of Finance launched a pilot to pay subsidies for electric vehicle charging stations using deposit tokens. The new pilot will begin in the fourth quarter of this year, starting in the administrative capital, Sejong City. If successful, it will expand nationwide.

Unlike credit cards, these deposit tokens are “programmable.” The government can code the tokens to work only during specific hours, such as 9 AM to 6 PM, or only in specific industries, such as transportation. This feature is aimed at stopping the misuse of public funds and reducing the need for audits, which are currently required for late-night or weekend spending.

The system also removes financial intermediaries like Visa or Mastercard networks, eliminating the need for business owners to pay a commission fee (usually 1-3%) to the card company if a credit card is used for payment. The Ministry of Economy and Finance stated that this “settlement structure without intermediaries” will alleviate the fee burden on small business owners. However, the pilot is still in the early stages, and it remains to be seen if commercial banks will charge different fees for handling these tokens.

Cryptopolitan previously reported that Shin Hyun-song, the nominee for the Governor of the Bank of Korea (BOK), in a written response to the National Assembly, stated that a central bank digital currency (CBDC) and commercial bank deposit tokens should be the “core” of the digital currency ecosystem. Shin Hyun-song acknowledged that stablecoins have a role in the economy, but he considers deposit tokens and government CBDCs a higher priority.

He emphasized that trust in the currency is the most important factor, arguing that privately issued virtual assets have “fundamental limits” in replacing fiat money. While the Bank of Korea remains cautious about crypto volatility, commercial banks like KB Financial Group (KRX: 105560) and Shinhan Financial Group (KRX: 055550) are racing to build the infrastructure for these tokens. KB Financial recently partnered with Circle to explore issuing a Korean Won stablecoin.

The post South Korea pushes its blockchain strategy with its deposit token pilot first appeared on Coinfea.

According to research, South Korean exchanges carry around 30% of global crypto trading volumes. According to Kaiko’s research, 85% of that activity is linked to altcoins, while BTC and ETH carry a much smaller weight. The ratio is skewed from the usual dominance of BTC and blue-chip assets. On Coinbase, which caters to US-based traders, BTC and ETH pairs make up 70% of all volumes.

South Korea maintains its status as an altcoin hub

Over 85% of volumes in South Korea come from altcoins. At the same time, the share of altcoin trading on Binance is down to around 30%. South Korean listings are relatively conservative, and the exchanges carry altcoins from previous bull markets. The KRW pairs also mean the available liquidity is localized rather than global. Since the exchanges are not dependent on the inflow of altcoins, some altcoins benefit from local hype and the general high-risk retail investment culture.

Weekly trading volumes on local exchanges are at around $2.66B, a relatively low baseline. South Korean exchange trading, including Upbit, Bithumb, and KuCoin, may also affect futures markets for selected assets. Overall, trading in Southeast Asia has shifted to a lower baseline. Japan’s market supplements a steady volume of $20-$30B weekly, while providing significant liquidity for BTC trading.

One notable effect of South Korean exchanges is that trending coins also spark acceleration on derivative markets. For instance, Enjin Coin, a relatively old asset, was among the top 5 assets on Bithumb as of April 15. Over 20% of ENJ volumes are against the South Korean won, allowing the asset to achieve a strong trend. Coinciding with the Bithumb rally, where ENJ reached a new high for 2026, open interest also increased to a three-year high.

Other altcoins with significant activity on South Korean markets include XRP and the recently trending ZAMA. In the case of ZAMA, open interest also spiked in accordance with the increased Bithumb and Upbit trading. However, for tokens trading on South Korean exchanges, futures still depended on Binance. Those assets may be watched by international traders, making use of strong directional moves to also benefit from the more easily available futures markets.

The markets in South Korea are still isolated due to local banking regulations, and foreign traders have found a workaround through Binance or perpetual futures platforms. However, not all older altcoins are available as perpetual futures. The recent examples of altcoin activity show that not all assets were abandoned, as long as they could attract sufficient liquidity and gain a clearer direction.

The post South Korea becomes the main hub for altcoins first appeared on Coinfea.