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South Korean lawmakers seek expanded FIU powers over unregistered crypto firms
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- DeepHorus
South Korean lawmakers have introduced a bill to significantly expand the powers of the nation's Financial Intelligence Unit (FIU) to tackle unregistered cryptocurrency operators. The proposal, led by People Power Party lawmaker Eom Tae-young and nine other legislators, aims to amend the Act on Reporting and Using Specified Financial Transaction Information. This move comes as authorities grapple with a regulatory gap in overseeing the rapidly evolving digital asset market.
The current regulatory framework in South Korea mandates that all crypto companies serving local customers must register with the FIU. However, enforcement has proven challenging. According to Yonhap news agency, between August 2022 and August 2025, police suspended investigations or preliminary inquiries into 23 out of 25 unregistered virtual asset service providers referred by the FIU. These companies and their related individuals were reportedly based overseas, complicating law enforcement efforts.
The newly proposed legislation would grant the FIU unprecedented investigative authority. Under the bill, any individual could report suspected violations directly to the agency. The FIU would then be empowered to investigate and analyze these allegations, file formal complaints with relevant authorities, and even request criminal investigations or provide information directly to investigators. This represents a shift from the current system where the FIU identifies suspects but must rely entirely on police and other bodies to pursue cases.
As of June, the FIU reported that only 28 crypto providers were registered in the country. The agency had also referred 40 suspected illegal operators to investigative authorities, highlighting the scale of the unregistered market. The new bill is designed to close this enforcement gap by equipping the financial intelligence agency with direct tools to act on violations, rather than being dependent on overwhelmed or jurisdiction-limited law enforcement channels.
The proposal reflects a growing legislative appetite in South Korea to tighten oversight of the crypto sector. It follows recent regulatory adjustments, such as the country lowering its Travel Rule threshold for crypto transfers to combat money laundering. If passed by the National Assembly, the amendment would mark a significant step in empowering financial regulators to police the digital asset industry more effectively and protect consumers from fraudulent or non-compliant operators.
