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South Korea FSC has taken a bold regulatory leap by implementing stringent Know Your Customer (KYC) measures for cryptocurrency exchanges and non-profit organizations starting in June. The move marks a significant chapter in South Korea’s evolving stance on digital asset governance.
The South Korea FSC, the nation’s top financial watchdog, confirmed via an official announcement that crypto exchanges and non-profit corporations will now be allowed to sell digital assets, provided they meet new KYC compliance standards.
The commission insists these changes aim to combat illicit activities such as money laundering while paving the way for a more mature crypto economy.
According to the new framework, non-profit organizations in South Korea will be permitted to sell crypto assets they receive as donations or sponsorships.
Likewise, cryptocurrency exchanges can now liquidate user-paid transaction fees received in digital currencies, both actions previously in regulatory gray areas.
“The South Korea FSC is taking decisive action to legitimize crypto transactions while mitigating systemic risks,”
said Choi Sung-kuk, senior policy advisor at the FSC.
“This ensures that the digital asset sector is safe, transparent, and aligned with international standards.”
The South Korea FSC clarified that this enhanced verification process is essential to prevent money laundering and protect the country’s broader financial ecosystem. All registered crypto entities must follow strict identification protocols for users and donors alike.
To ensure the “proper use of donated virtual assets,” the FSC mandates that non-profit organizations only deal with cryptocurrencies supported by at least three South Korean won-based exchanges. In parallel, exchanges can only sell the top 20 market-cap coins listed on any of the five domestic KRW exchanges.
Every planned sale of virtual assets must go through the board of directors’ approval, and be disclosed in advance, a move designed to eliminate internal malpractice.
Kim Hyeon-joo, blockchain law expert at Korea University, noted, “This degree of transparency required by the South Korea FSC sets a precedent in Asia. It places South Korea at the forefront of responsible digital asset management.”
In addition to enforcing KYC standards, the South Korea FSC is cracking down on unstable digital assets like zombie coins and memecoins. These speculative tokens will now face revised listing criteria that demand a minimum threshold of cumulative transaction volumes before they’re supported on exchanges.
For memecoins, this means transaction support will only be considered if user engagement reaches substantial levels, potentially filtering out pump-and-dump schemes and investor traps.
These policy shifts by the South Korea FSC come on the heels of broader efforts to integrate crypto into traditional finance. In early 2025, the government hinted at lifting the institutional trading ban for local firms. The current regulatory upgrades appear to be laying the groundwork for that transition.
According to Yoon Seok-woo, head of the Korea Digital Finance Association,
“The South Korea FSC is positioning the country to become a regulatory blueprint for other nations navigating crypto compliance. This isn’t just about restriction—it’s about strategic adoption.”
The sweeping regulations unveiled by the South Korea FSC signal a new era of digital asset maturity in the country. From mandating KYC to tightening oversight on memecoins and corporate governance, South Korea is building a compliant yet crypto-friendly ecosystem.
With clear rules, institutional participation on the horizon, and reduced exposure to risk, the South Korea FSC may very well have set the gold standard for crypto regulation in Asia. The Bit Gazette will continue to observe the market and report as events unfold.
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