South Korean Court Rules Stablecoin Exchange Services Require VASP License, Upholding FIU Decision

Jul 24, 2026

The Seoul Administrative Court ruled on July 24, 2026, that stablecoin and cryptocurrency exchange services require a VASP license, upholding the Financial Intelligence Unit's (FIU) transaction suspension against fintech firm Darwin KS. Darwin KS had operated tourist-focused crypto-to-Won ATM exchanges under a 2020 Ministry of Science and ICT regulatory sandbox. CEO Lee Jong-myung criticized the FIU's unilateral enforcement and criminal referral, announcing plans to appeal the decision.

Court upholds VASP license requirement

▪The Seoul Administrative Court dismissed a lawsuit filed by Darwin KS against the Financial Intelligence Unit to cancel a transaction suspension request.
▪The Seoul Administrative Court ruled on July 24, 2026, that cryptocurrency exchange services, including stablecoins, require a Virtual Asset Service Provider license.

Darwin KS cryptocurrency ATM service

▪Darwin KS deposited the virtual assets sent by customers with Korea Digital Asset, a custody company approved by the Financial Intelligence Unit.
▪Darwin KS operated a blockchain-based exchange service allowing foreign tourists to exchange Bitcoin, Ethereum, and Tether for Korean Won cash at automated teller machines.

FIU transaction suspension order

▪The Financial Intelligence Unit sent an official letter to existing virtual asset operators on September 22, 2023, requesting them to suspend transactions with Darwin KS.
▪The Financial Intelligence Unit warned virtual asset operators that continuing transactions with Darwin KS could result in business suspension under the Act on Reporting and Use of Specific Financial Transaction Information.

Regulatory sandbox approval dispute

▪Darwin KS argued that its service was legal under the Ministry of Science and ICT regulatory sandbox and that the Financial Intelligence Unit violated the Administrative Procedure Act.
▪Darwin KS obtained regulatory sandbox approval from the Ministry of Science and ICT in 2020 to conduct its blockchain-based exchange service.

Darwin KS appeal plans

▪Darwin KS CEO Lee Jong-myung stated that the Financial Intelligence Unit reported the company to the Financial Crime Investigation Unit without providing an opportunity for explanation.
▪Darwin KS CEO Lee Jong-myung announced plans to appeal the court decision, claiming the first-instance court accepted only the unilateral arguments of the Financial Intelligence Unit.