South Korea Court Backs FIU, Says Stablecoin Exchange Services Require VASP Registration

A South Korean court ruled that companies cannot offer exchange services for stablecoins and other virtual assets, or cryptocurrencies, without registering as a virtual asset service provider, or VASP.

Edaily reported on July 24 that the Seoul Administrative Court's Sixth Division dismissed a lawsuit by blockchain fintech company Darwin KS seeking to cancel the Financial Intelligence Unit's request to suspend transactions with the firm.

The decision marks the first court ruling on the legality of stablecoin exchange services. The court backed the FIU's view that virtual-asset exchange services cannot operate without VASP registration.

Darwin KS had been operating ATM services that exchanged Bitcoin, Ether and Tether held by foreign tourists into cash in South Korean won, the report said. Customers' virtual assets were stored at Korea Digital Asset, or KODA, an FIU-registered custody company, while Darwin KS collected fees during the exchange process.

The company had continued the business based on regulatory sandbox approval granted in 2020 by the Ministry of Science and ICT. But in September 2025, the FIU concluded that Darwin KS was conducting a virtual-asset exchange business without VASP registration and asked existing virtual-asset service providers to halt transactions with the company.

At issue was whether Darwin KS's service fell under the definition of a virtual-asset business under South Korea's Act on Reporting and Use of Certain Financial Transaction Information. Darwin KS argued that it was not a VASP because it did not directly hold customers' assets and only provided a technical brokerage and settlement system. The FIU argued that because the company earned fees in the virtual-asset exchange process, the service constituted a virtual-asset business.

Darwin KS plans to appeal the first-instance ruling.