With the Broadcast Media & Communications Review Commission effectively idle… unregistered crypto exchanges continue operating openly

Despite being designated as "unregistered operators"

No blocking measures implemented

Fallout from the BMC Review Commission’s "three-member" lineup

High potential for criminal misuse

Also flagged as a "regulatory blind spot"

Some exchanges that financial authorities have designated as unregistered virtual-asset (cryptocurrency) operators are found to be continuing to operate openly in Korea. While the government is stepping up inspections of crypto exchanges, criticism is growing that overseas unregistered operators are being left in a regulatory blind spot.

According to relevant ministries on the 10th, the Financial Intelligence Unit (FIU) under the Financial Services Commission last month designated the Singapore-based crypto exchange BingX as an “unregistered virtual-asset operator.” An unregistered operator is a company that has not obtained a virtual-asset service provider (VASP) license from the authorities. An FIU official said, “(Unregistered operators) are businesses that have not filed with financial authorities, so users should exercise caution when using and trading.”

Despite the designation, BingX continued marketing to Korean users through YouTube and other channels until recently. Under the Act on Reporting and Using Specified Financial Transaction Information (the Specified Financial Information Act), it is illegal for unregistered virtual-asset operators to conduct business targeting Korean nationals. When FIU designated BingX as an unregistered operator last month, it also moved to block access to the website. However, BingX’s official website remained accessible as of this date.

That BingX remains accessible in Korea despite the authorities’ measures is largely due to the Broadcast Media & Communications Review Commission (BMC Review Commission) being effectively “shuttered but open” since last year. Under current law, website access blocks require the commission’s approval. However, since its launch in October last year, only 3 of the 9 statutory seats have been filled.

As a result, most unregistered virtual-asset operators designated by financial authorities since the second half of last year have not had access blocked. Exchanges such as KCEX and QXALX, which FIU identified as unregistered operators in the second half of last year, are representative cases. KCEX in particular was designated an unregistered operator about six months ago, yet it still runs a Korean-language website. An FIU official said, “It is impossible to block a specific website without the BMC Review Commission’s approval,” adding, “Once the commission is constituted, we plan to request cooperation again.”

The key concern is investor harm. Because unregistered virtual-asset operators are outside the authorities’ management and supervision, they are more likely to be exploited for crime. According to data submitted by the National Police Agency to the office of Rep. Choo Kyung-ho of the People Power Party, losses from virtual-asset crime in Korea over roughly the past six years—from 2021 through August last year—have already reached 6.6 trillion won. A government official said, “(Unregistered operators) often lack sufficient mechanisms for user protection and anti-money laundering (AML), raising risks such as hacking and fraud, as well as concerns they could be used to conceal criminal proceeds.”

Some also see a regulatory blind spot emerging from lack of coordination among authorities. Critics say that even after financial authorities designate illegal exchanges as unregistered virtual-asset operators, it can take months to complete website blocking by the BMC Review Commission—effectively granting a “grace period.” An industry official said, “This could create a reverse-discrimination issue versus domestic VASP operators that bear regulatory burdens,” adding, “If (unregistered operators) continue operating in Korea and user losses occur, it could also undermine trust in the market as a whole.”