South Korea on the hunt for unlicensed digital asset exchanges

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South Korean authorities have partnered with leading industry stakeholders to crack down on unlicensed digital asset exchanges.

The Financial Intelligence Unit (FIU) has tapped the Digital Asset Exchange Association (DAXA) on the crackdown, reports one local news outlet. DAXA is an industry organization that includes the largest exchanges in the East Asian nation, from Coinone and Bithumb to Korbit and Upbit.

DAXA announced on December 4 that it was lending a hand to the regulator and would collect all reports and tips on any unlicensed exchanges in the country. Users can report directly through email or calls and should indicate the reasons for the suspicion, evidence of illegal operations in South Korea, and any other relevant information.

Upon reviewing the report, the organization will forward the credible tips to FIU for further action. The anti-money laundering watchdog will then weigh the tip and determine the next actions, including prosecution, steep fines, or jail terms for the perpetrators.

“If the business operator continues to engage in unreported business activities, the FIU plans to take necessary measures, such as notifying the investigative agency,” commented a DAXA official.

South Korea is one of the leading digital asset markets, with exchanges such as Upbit and Bithumb among the world’s largest—the latter ranked fifth processing over $3.4 billion. However, the largest operators dominate the market. An FIU study in October revealed that most small exchanges struggle to stay afloat as the big four continue to eat into their customer base.

Despite the challenges, digital assets remain a big part of the country’s financial space. In November, the Democratic Party announced that all its candidates must now declare their digital asset holdings.

South Korean regulators have also been exploring enabling regulations for the sector. In October, the Financial Supervisory Service announced that it would invest heavily in rolling out a new framework to support existing digital asset regulations.

Watch: What’s next for digital asset exchanges & investment?