Crypto.com Pauses South Korean Entry to Address FIU Concerns

• Crypto.com delays South Korea launch amid regulatory talks.
• FIU scrutinizes Crypto.com’s AML measures in Korea.
• Crypto.com halts new user onboarding in South Korea.

Crypto.com, a cryptocurrency exchange, announced its decision to delay its planned launch in South Korea, which was initially set for April 29, 2024. The company cited the need for further discussions with local regulators as the primary reason for the postponement. This decision follows a report of regulatory scrutiny involving the Financial Intelligence Unit (FIU) of South Korea, which conducted a visit to Crypto.com’s local offices.

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The postponement is seen as a strategic move to ensure compliance and understanding with Korean regulatory frameworks, which are known for their stringent measures, especially concerning anti-money laundering (AML) practices. The delay highlights Crypto.com’s commitment to adapting to the local regulatory environment to facilitate a responsible entry into the South Korean market.

Regulatory Challenges in South Korea

South Korea’s cryptocurrency market is among the largest and most active globally, making it a lucrative yet challenging market for international exchanges. The country has implemented strict regulations that effectively restrict foreign exchanges from directly offering services without local partnership or acquisition of a domestic exchange. This has previously influenced major exchanges like Binance and Crypto.com to acquire local entities to gain a foothold in the market.

The FIU’s scrutiny came after concerns were reportedly raised regarding the adequacy of Crypto.com’s AML measures in its documentation. This regulatory body’s involvement underscores the high standards set by South Korean authorities to combat illicit financial activities and ensure the integrity of their financial markets.

Impact on Crypto.com’s Strategy

In response to regulatory concerns, Crypto.com has halted the onboarding of new customers in South Korea and limited customer activities to withdrawals only. This cautious approach reflects the company’s respect for local laws and its intent to cooperate with regulatory bodies to ensure full compliance.

Crypto.com’s strategy involves taking over the operations of OkBit, a locally licensed exchange slated to cease operations by the end of April. At the time of acquisition, OkBit had approximately 900 customers, none of whom were implicated in any AML issues, highlighting the potential for a smooth transition once regulatory approvals are secured.

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