South Korea has taken two major regulatory steps in December 2024 that will fundamentally reshape its cryptocurrency and digital asset landscape. The developments involve a strict enforcement policy by a global tech giant and a landmark legislative breakthrough by the nation's parliament.
Google's VASP Registration Mandate for Crypto Exchanges
Google has implemented a decisive policy shift requiring all cryptocurrency exchange applications on the Google Play Store in South Korea to submit documented proof of their Virtual Asset Service Provider (VASP) registration with the country's Financial Intelligence Unit (FIU). The FIU, operating under the Financial Services Commission (FSC), is South Korea's primary anti-money laundering authority for virtual assets.
Applications failing to meet this requirement will become unavailable for new installations starting January 28, 2025. While existing users of non-compliant apps can continue using installed versions, they will be unable to download updates or reinstall them after removal, creating potential long-term security vulnerabilities. This policy is critical as Android devices hold approximately 70% of South Korea's smartphone market.
The VASP registration framework itself is comprehensive, mandating robust Anti-Money Laundering (AML) systems, strict Know-Your-Customer (KYC) procedures, transaction monitoring, minimum capital requirements, and local incorporation for foreign exchanges.
This move has created immediate compliance challenges for major global exchanges operating in South Korea, including Binance, OKX, and Bybit, which have not yet completed their VASP registration. In contrast, domestic exchanges like Upbit and Bithumb are already fully compliant, giving them a significant competitive advantage.
National Assembly Passes Historic Token Securities Legislation
In a separate but equally significant development, South Korea's National Assembly approved groundbreaking amendments to the Capital Markets Act and Electronic Securities Act on December 18, 2024. This establishes the country's first comprehensive legal framework for security token offerings (STOs) and tokenized securities.
The legislation provides the first official recognition of digitized securities using distributed ledger technology under South Korean law. It creates a structured pathway for qualified issuers to directly issue, record, and manage tokenized securities and integrates them into the existing electronic registration system managed by the Korea Securities Depository.
A key innovation is the creation of a new category of financial institutions called "issuer account management institutions" to oversee the technical infrastructure for token securities issuance and management. The legislation also establishes clear custody requirements and settlement procedures that align with traditional securities practices.
The regulatory journey began with preliminary guidelines in 2021, followed by extensive consultations. The legislation now proceeds to Cabinet consideration, with detailed implementing regulations expected from the FSC and Financial Supervisory Service throughout 2025, leading to potential full implementation in 2026.
This dual regulatory approach—stricter enforcement for cryptocurrency exchanges and a progressive framework for tokenized securities—positions South Korea as a jurisdiction with stringent but structured digital asset regulations, balancing innovation with consumer protection and market integrity.
