Crypto license in South Korea: FSC VASP requirements (2026)

A citizen petition exceeding 50,000 signatures forced South Korea's National Assembly to formally deliberate repealing the planned 22% crypto capital gains tax before its January 2027 start date; the main opposition party introduced a full-repeal bill, leaving the policy's fate unresolved as of May 2026.

South Korea's sweeping Digital Asset Basic Act, designed to replace the 'virtual asset' terminology with 'digital asset,' unify issuance and trading rules, and require 100% reserve backing for stablecoins, stalled in parliament as the Bank of Korea and the FSC clashed over whether only bank-majority-owned entities may issue stablecoins, pushing passage into 2026 at the earliest.

South Korea's Financial Supervisory Service issued Upbit, the country's dominant crypto exchange, a roughly $25 million fine, one of the first major enforcement actions under the post-VAUPA supervisory framework; Upbit announced it was assessing an appeal.

Montenegro extradited Terraform Labs co-founder Do Kwon to the US on December 31, 2024; he later pleaded guilty to fraud charges and was sentenced to 15 years in federal prison, closing the criminal enforcement chapter of the $40 billion collapse that galvanised South Korea's legislative overhaul.

South Korea's first comprehensive crypto consumer-protection statute took effect after a one-year implementation grace period, requiring exchanges to hold at least 80% of user crypto in cold storage, segregate client cash in licensed bank accounts, maintain insurance or reserve funds against hacks, and criminalising market manipulation and insider trading with penalties up to life imprisonment for large-scale offences.

Parliament passed South Korea's first standalone crypto statute, consolidating 19 pending bills, granting the FSC supervisory and penalty powers over all VASPs and establishing enforceable rules on user asset safekeeping, market-manipulation prohibitions, and mandatory suspicious-activity reporting; the legislation was directly fast-tracked in response to the Terra/Luna and FTX collapses.

The algorithmic stablecoin TerraUSD (UST) lost its peg in May 2022, dragging Luna to near-zero and wiping an estimated $40-45 billion in market value within days; the FSC and FSS immediately launched emergency on-site inspections of all major domestic exchanges and placed comprehensive crypto legislation on a parliamentary fast-track.

Amendments to the Act on Reporting and Using Specified Financial Transaction Information brought South Korea's FATF Travel Rule into operation, requiring VASPs to collect and transmit sender and beneficiary identity data on transfers above ₩1 million (~$750), making Korea one of Asia's earliest Travel Rule jurisdictions.

Amendments to the Act on Reporting and Using Specified Financial Transaction Information took effect, introducing South Korea's first statutory AML/CFT framework for crypto: VASPs must register with KoFIU, obtain ISMS information-security certification, partner with a real-name-verified bank, and comply with customer identity verification and suspicious-transaction reporting obligations; existing VASPs had until September 24, 2021 to comply or cease operations.

Following FSC-directed inspections of six major banks, South Korea required all retail crypto trading to flow exclusively through real-name verified bank accounts, abolishing anonymous 'virtual accounts'; the rule forced every exchange to partner with a single designated bank and gave regulators their first direct AML lever over the crypto market.

South Korea's Financial Services Commission announced a blanket ban on all ICOs, declaring them violations of capital market law regardless of technical structure and threatening stern penalties; the ban remained in place for nearly eight years, pushing Korean blockchain projects offshore until a disclosure-based framework began emerging in 2025.