FSC Chair: Reviewing shift to a licensing regime for virtual asset exchanges

South Korea’s financial authorities have formally set out a plan to shift the regulatory framework for virtual asset exchanges from the current registration system to a licensing regime. The policy direction is to oversee exchanges not as mere private businesses but as entities akin to public financial infrastructure.

On the 28th, FSC Chair Lee Eok-won said at a monthly briefing with the press corps at the Government Complex Seoul that “in the second phase of legislation centered on the Digital Asset Basic Act, we are reviewing a plan to convert virtual asset exchanges to a licensing regime.” The idea is to move away from a structure in which exchanges renew their business registrations every three years and instead grant operating status through stricter screening.

Lee cited the expanding role of exchanges as a key backdrop for the shift. “If converted to a licensing regime, exchanges would in effect be granted permanent operating status,” he said, adding that “accordingly, responsibility for market stability and investor protection must be significantly strengthened.”

In particular, improvements to corporate governance were presented as a major task. Lee said, “If control is concentrated in a specific shareholder, conflicts of interest may arise,” and added that “under a licensing regime, there is a need to review the exchange’s governance and overall internal control framework together.”

Financial authorities plan to clarify exchanges’ status and responsibilities through a licensing regime and stabilize market order. By regulating exchanges as core infrastructure of financial markets rather than simple brokerage platforms, the aim is to institutionally strengthen the prevention of unfair trading and investor protection.

In the virtual asset industry, some view the shift to licensing as a factor that could raise barriers to entry while also boosting institutional credibility. However, depending on how licensing requirements and the scope of supervision are set, the impact across the industry could vary, making the legislative process an important variable going forward.

The FSC plans to establish detailed standards and a supervisory framework for the virtual asset exchange licensing regime during second-phase legislative discussions centered on the Digital Asset Basic Act.