South Korea's Financial Intelligence Unit announced on October 13, 2026, that it ordered access blocks against 27 unregistered foreign crypto exchange websites, including KuCoin and MEXC. Approved by the Korea Communications Standards Commission, the move aims to curb foreign capital flight after South Korean traders moved an estimated 700 trillion won overseas between 2021 and 2026 and paid $3.5 billion in foreign fees in 2025. Regulators urged users to withdraw assets via DAXA guidance.
Access blocking of unregistered crypto exchanges
- ▪The Korea Communications Standards Commission approved the website access blocks against unregistered crypto exchanges on October 6, 2026 and October 7, 2026 following two rounds of deliberations
- ▪On October 13, 2026, South Korea's Financial Intelligence Unit ordered access blocks on 27 unregistered offshore crypto exchange websites, including KuCoin, MEXC, Phemex, BingX, and BitMart, while those with servers or operators inside South Korea face service termination
- ▪The Financial Intelligence Unit announced on October 13, 2026, that it will monitor and request new blocks on replacement mirror sites of blocked exchanges such as KuCoin and MEXC whenever unregistered crypto exchanges switch domains to operate in South Korea
Enforcement and penalties for unregistered operators
- ▪Operating an unregistered virtual asset exchange in South Korea carries legal penalties of up to five years in prison or a fine of up to 50 million won
- ▪The Financial Intelligence Unit referred 44 unregistered crypto exchange operators to South Korean investigative agencies following its website blocking decision on October 13, 2026
- ▪South Korea's Financial Intelligence Unit announced it will no longer wait for court rulings or confirmed user losses before seeking access blocks against unregistered virtual asset platforms
User withdrawals and platform response
- ▪A KuCoin spokesperson stated on October 13, 2026, that user assets remain secure and that KuCoin respects applicable regulations across jurisdictions while strengthening its compliance framework
- ▪The Financial Intelligence Unit said the Digital Asset eXchange Alliance, a self-regulatory body formed by major South Korean exchanges, will provide withdrawal process guidance to traders affected by the FIU's October 2026 foreign exchange website blocks
- ▪South Korea's Financial Intelligence Unit urged users holding digital assets on unregistered foreign exchange platforms to withdraw their funds immediately on October 13, 2026
Offshore exchange compliance requirements
- ▪South Korean regulators judge whether an offshore crypto platform such as KuCoin operates locally by checking for Korean-language websites, marketing targeted at South Koreans, and won payment support
- ▪Crypto service providers targeting South Korean users must obtain Information Security Management System certification and register with the Financial Intelligence Unit
Trading fees on offshore exchanges
- ▪A June 2026 probe by the Digital Asset eXchange Alliance and registered operators found flagged offshore crypto platforms charged average fees of 1.5% to 10%, up to 62 times the 0.16% average at South Korea's five largest registered won-based exchanges
- ▪South Korean investors paid foreign cryptocurrency exchanges an estimated $3.5 billion in fees during 2025, according to research by Tiger Research
Capital outflows to overseas platforms
- ▪An estimated 700 trillion won was moved from South Korean exchanges to overseas crypto platforms between 2021 and 2026, according to Tiger Research and Chainalysis
- ▪South Korean-owned digital wallets deposited approximately $1.64 billion into decentralized platforms Hyperliquid, Lighter, and Variational between January 2024 and mid-2026, according to Tiger Research
- ▪Net stablecoin outflows from South Korea's major cryptocurrency exchanges continued for an 18th consecutive month through June 2026
Registered domestic exchange market
- ▪South Korea has approximately 27 domestic cryptocurrency platforms registered with the Financial Intelligence Unit as compliant operating exchanges
- ▪Domestic crypto trading volume in South Korea is heavily concentrated between Upbit and Bithumb, which offer only spot trading while offshore platforms provide perpetual futures with high leverage
- ▪Cryptocurrency assets held on registered South Korean exchanges lost 33% of their market value in the first half of 2026 compared to the second half of 2025, dropping to 58.9 trillion won
Debatable claims
- ▪South Korea should block unregistered foreign crypto exchanges to protect domestic investors
- ▪Blocking offshore websites without proven user losses oversteps South Korean regulatory authority
- ▪Restricting offshore exchanges unfairly strengthens the market dominance of Upbit and Bithumb
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