The Korean FIU will only license two virtual asset service providers in 2025, down from four years prior, while also extending the approval time from 11 to 16 months.
The South Korean digital asset market is facing significant tightening as the Financial Intelligence Unit (FIU) has only approved two new virtual asset service providers (VASPs) for the entire year of 2025. Happy Block received approval in January for exchange operations, while Blosafe was licensed in August for transfer and storage management services – a 50% reduction from its four approvals in 2024.
More concerningly, the Medium time from application submission to approval has increased from 11 months in 2024 to 16 months in 2025. Blosafe had to wait over 600 days for approval, while Bit Korea – a joint venture with Hana Bank established in 2024 – has yet to receive approval and cannot commence business. Under South Korean regulatory structure, businesses can register as virtual asset operators but are prohibited from operating until official approval is granted.
On December 23rd, after a delay of one year and four months, the FIU finally approved the license renewal for Dunamu – the operator of Upbit, South Korea's largest cryptocurrency exchange. The FIU had fined Dunamu 35.2 billion won in November 2025 for violations, including neglecting anti-money laundering obligations. Similarly, Korbit filed for renewal in September 2025, while Bithumb, Coinone, and Gopax filed in October, but by the end of the year, no results had been received. On December 31st, Korbit received an institutional warning and was fined 2.73 billion won for violating regulations.
Suspicious transactions surge amid tightening campaign.
The FIU's tightening measures come amid a surge in suspicious transaction reports. From January to August 2025, VASPs submitted 36,684 suspicious transaction reports to the FIU, far exceeding the total of 16,076 reports in 2023 and 19,658 reports in 2024. The Korea Customs Service reported that from 2021 to the end of August 2025, approximately 9.56 trillion won was related to cryptocurrency-related crimes.
Approximately 90% of cases involve the hwanchigi model – illegal overseas money transfers where illicit funds are converted into cryptocurrency through foreign exchanges, circulated on domestic platforms, and then converted back into won. To combat this, South Korea announced plans in November 2025 to expand the Travel Rule requirement to all transaction sizes, eliminating the previous exemption for transfers under 1 million won.
Despite the stringent regulatory environment, the South Korean financial industry continues to seek opportunities. In his New Year's message on January 3rd, Ham Young-joo, chairman of Hana Financial Group, stated that stablecoins should be XEM a strategic priority, emphasizing the need to build a comprehensive system for their issuance and distribution. This highlights the divergence in development vision between the traditional financial sector and regulatory authorities.
