SOUTH KOREA Trends and Developments Contributed by: Ohoon Kwon and Yeon Seo, Cha & Kwon Law Offices
abuse as a particular focus and set out four repre- sentative patterns: • repeated market-order buy and sell trades used to inflate volume; • the placement of large fictitious buy orders can- celled before execution to suggest demand; • matched-order trading among multiple accounts under common control; and • successive high-priced buy orders used to drive a directional price move. The FSS is expanding its market analysis platform, VISTA (Virtual asset Intelligence System for Trad- ing Analysis), adding AI functions to detect suspect account clusters automatically, with the 2026 budget allocating funds to server upgrades and detection algorithm enhancements. On a related front, the FSC is reviewing a payment-suspension mechanism for virtual asset manipulation cases, modelled on the equivalent tool in the Capital Markets Act. Algorithmic and API-driven trading is now the FSS’s primary surveillance focus. The post-listing window is a particular concern, given how thin order books and concentrated holdings make price and volume easier to distort in the hours after a token first trades. Listed issuers should monitor early-stage trading activity around their tokens, and licensed exchanges have begun building internal monitoring against these patterns because the regulators expect them to. For foreign service providers operating in or supporting the Korean market, VAUPA enforcement is now an active prosecutorial risk, and compliance arrange- ments should be reviewed accordingly. Enforcement against virtual asset misconduct does not run only through VAUPA. Unlicensed VASP operation remains prosecutable under the Specified Financial Information Act, with the Korea Financial Intelligence Unit (FIU) serving as the primary refer- ral channel and suspicious transaction reports from licensed exchanges increasingly triggering early-stage VAUPA case-building. The five real-name-account- licensed exchanges and their banking partners hold most of the relevant transaction and identification records. Those records are routinely sought through prosecution-led requests during VAUPA investiga-
tions, and issuers whose tokens are listed on those venues often find themselves drawn into proceedings as third parties even where they are not the suspects. On a related point, the FIU has consistently treated Foreign VASPs that have not filed under the Speci- fied Financial Information Act as unreported VASPs for Korean regulatory purposes. Korean residents using such platforms for their own trading are not, on the FIU’s stated position, themselves the regulatory tar- get; the targets are Korean intermediaries that facili- tate the relationship. The position is most acute for referral operators, businesses that introduce Korean retail users to overseas trading venues, typically for a commission denominated in tokens or fiat. The FIU treats referral activity directed at an unfiled foreign VASP as itself facilitating an unreported VASP rela- tionship, and the Specified Financial Information Act backs that position with both administrative penal- ties and criminal liability. Foreign-affiliated platforms that operate referral or affiliate channels into Korea should treat the Specified Financial Information Act filing question as a live risk to their business model rather than as a remote concern. Corporate and Institutional Onramps: Opening Won-Denominated Crypto Accounts Corporate access has been the most frequent ques- tion from foreign businesses evaluating Korean market entry over the past two years. The FSC has begun lifting the long-standing restriction on Korean corpo- rate entities holding won-denominated virtual asset accounts at licensed exchanges. Its “Roadmap for Corporate Participation in the Virtual Asset Market” was published on 13 February 2025. As of April 2026, only the first phase has entered into force. Phase one covers two categories of holder. Law- enforcement and revenue authorities, including the Prosecutors’ Office, the National Tax Service and the Korea Customs Service, have been able to open won- denominated accounts at licensed exchanges since November 2024, for the limited purposes of forfei- ture enforcement, tax collection and the processing of seized digital assets. From the second quarter of 2025, certain non-profit entities and the licensed exchanges themselves may also open such accounts, for the purpose of liquidating virtual assets. The non-
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