A Regulatory Body, the KCSC, Holds Off Its Actions Against Overseas Exchanges (Updated November 2022)

[Executive Summary]

• The Korea Communications Standards Commission (the “KCSC”) is holding off its decision to block access to overseas virtual assets exchanges that the FIU reported in August, for operating without a VASP license in Korea. According to an official of the KCSC, the members of the KCSC had a consensus that the standard for an ‘illegal operation’ suggested by the FIU earlier, must go through a separate, internal review of the KCSC, further delaying the action of the KCSC.

The Korea Communications Standards Commission (the “KCSC”) is holding off its decision to block access to overseas virtual assets exchanges that the FIU reported to the KCSC in August, for operating without a VASP license in Korea. The members of the commission had a consensus that the standard for an ‘illegal operation’ suggested by the FIU earlier must go through a separate, internal review of the KCSC, and that the it must take into consideration any changes in the way these exchanges operate has there been any since the reporting by the FIU, according to an official of the commission.

According to a member of the National Assembly, the KCSC voted down the request from the FIU to block the access of the 16 overseas exchanges. The commission explained that there need more procedural steps and necessary measures to be taken before it can take administrative actions. Also, the KCSC needs to consider what has been changed since the FIU’s reporting, the official added, such as in the case where the service was provided in Korean language at the time of the FIU’s report, but has been excluded ever since.

However, the FIU refutes such logic, arguing that the FIU reported the exchanges so they can be punished for the past illegal operations and prevention of similar incidents in the future. The chairman of the KCSC, during the audit of the National Assembly, pleaded that it is short in personnel, and that it will do its best to take appropriate measures in cooperation with the FIU.

The KCSC—the deciding authority on whether to restrict access to the 16 overseas VA exchanges—seems reluctant to take decisive action since doing so can be expected to bring user complaints and possibly legal actions from the VASPs. Industry participants are well advised to closely follow the KCSC’s course of action as the FIU and the National Assembly continue to call for a more proactive role and measures by the commission.

Read More: Presidential Office Orders Inquiry into Busan’s Digital Exchange Event (Updated November 2022)