South Korea has ordered website blocks against 27 unregistered overseas cryptocurrency exchanges in a renewed push to protect domestic investors from platforms operating in the country without required registration. High-profile services such as KuCoin, MEXC, Phemex, BingX and BitMart are all affected by the restrictions, which could make it harder for local users to reach the websites and withdraw their cryptocurrency assets.

FIU Decision Follows Two Review Sessions

The decision was carried out by South Korea's Financial Intelligence Unit (FIU) on October 13. The Korea Communications Standards Commission (KCC) approved the restrictions after holding two review sessions on October 6 and 7, according to a report by Etoday.

The measures target websites operated by overseas virtual asset service providers (VASPs) that have not completed the registration South Korea requires. Registration, required since 2021, involves information security certification and real-name banking conditions that tie exchanges into the domestic system, and the blocked operators have not completed that process. Authorities singled out KuCoin, Phemex, BingX, MEXC and BitMart as the platforms being targeted, while the broader group of affected exchanges also includes XT.com, Poloniex, Bitrue, CoinW and BTCC. The restrictions are intended to reduce the availability of services that are not registered in the country.

Enforcement steps will differ depending on where each website's server is located. If a website is hosted in its home country, officials will ask for its termination. In the interim, authorities will block access to websites hosted on foreign servers.

The website blocks extend existing measures beyond mobile applications. South Korea had previously limited the installation and updating of new apps for unregistered exchanges, affecting apps distributed through the largest app stores, including Google Play and Apple's App Store.

Broader Enforcement Measures

The action forms part of a wider enforcement effort. The FIU has referred 44 unregistered virtual asset service providers to investigative authorities. Regulators have also restricted the transfer of virtual assets to these operators by registered exchanges, and authorities have shut down credit card purchases from unregistered cryptocurrency providers.

According to South Korean authorities, unregistered providers circumvent key financial reporting and supervision rules, leaving customers exposed to greater risks around security, asset protection and access to their funds. At the same time, the new restrictions could complicate withdrawals for existing users of the blocked platforms.

Large Fee Gap Between Registered and Unregistered Platforms

A joint industry investigation conducted in June revealed significant variation in transaction fees. According to the reported findings, fees at identified unregistered providers ranged from 1.5% to 10%. By comparison, the average fee of South Korea's top five exchanges, which trade in South Korean won, was 0.16%, compared with an average of 0.19% for the top five exchanges.

As a result, some unregistered platforms charge fees of up to 62 times the domestic average. The statistics illustrate the potential costs users could incur when trading through these services, although the amount each platform charges may differ based on the individual transaction.

Ongoing Monitoring and Withdrawal Support

The FIU will continue to track alternative domains and replacement websites that could be used to circumvent the restrictions. If affected exchanges are still operating on other website addresses, additional blocks may be requested. The approach seeks to prevent platforms from avoiding the restrictions simply by changing their domains.

The government is also set to offer withdrawal guidance through the Digital Asset Exchange Alliance (DAXA). The support is intended to assist affected customers in the process of recovering their existing assets. Even so, users should verify official instructions before transferring money or providing account details.

There are currently 28 virtual asset service providers registered with the FIU in South Korea, a roster users can use as a reference point for checking a platform's status before depositing funds. Investors were warned to stay away from platforms that guarantee returns, principal protection, insider information or special global listings. The FIU also recommended that customers of unregistered services remove their deposits and crypto assets as soon as possible.

This report was originally published by Live Bitcoin News.