South Korean lawmakers want to give the country’s financial intelligence agency a more direct role in policing unregistered cryptocurrency firms, a change that follows years of suspended investigations into overseas operators. If enacted, the amendment would mark a notable shift in how the country enforces its crypto registration regime.
What the Proposed Bill Would Do
A group of South Korean lawmakers has introduced legislation that would expand the Financial Intelligence Unit’s (FIU) authority to investigate unregistered cryptocurrency businesses. People Power Party lawmaker Eom Tae-young and nine other lawmakers filed the bill on Thursday, aiming to add a new provision to the Act on Reporting and Using Specified Financial Transaction Information, according to CoinTelegraph.
Under the proposal, anyone could report suspected violations of the law to the FIU. The agency would then be able to investigate and analyze alleged violations, file complaints with the relevant authorities, request criminal investigations, or provide information to investigators. The measure is designed to give the regulator a clearer path to acting on tips about illegal operators rather than waiting on other agencies.
Why Lawmakers Are Seeking the Change
Under the current system, the FIU identifies suspected unregistered operators but relies on police and other authorities to pursue investigations. Proponents of the change argue that this arrangement has limited enforcement, pointing to data reported by Yonhap showing that police suspended investigations or preliminary inquiries into 23 of 25 unregistered virtual asset service providers referred by the FIU between August 2022 and August 2025. The companies and related individuals involved were reportedly based overseas, which can complicate domestic enforcement efforts and leave unregistered services operating without consequence.
Registration Rules and Enforcement Context
Crypto companies serving South Korean customers are required to register with the FIU. The regulator said in June that 28 providers were registered and that it had referred 40 suspected illegal operators to investigative authorities. The proposed amendment is intended to give the FIU a more direct role in pursuing the cases it currently refers to other agencies, closing a gap between detection and investigation that supporters say has allowed unregistered operators to continue serving Korean users.
What Happens Next
The bill is still at an early legislative stage and has not been enacted. It must be approved by the National Assembly before it can change the existing law, and its final outcome has not been determined. Until then, the FIU continues to operate under the existing framework, where it flags suspected operators but leaves formal investigations to police and other bodies.
For additional context, readers can review a practical BlockchainReporter guide to blockchain interoperability and an overview of crypto KYC requirements.
The FIU has since secured approval to block domestic access to the websites of 27 unregistered operators, extending the enforcement beyond app stores to the open web.
