<p>While numerous cryptocurrency-only exchanges in Korea have been vying for registration as fiat-to-crypto exchanges with the financial regulator, the government has turned down another platform’s attempt to achieve this status.</p><h2 id="header-0">Unmet standards</h2><p>According to <a href="https://news.mtn.co.kr/news-detail/2023110210575279017" rel="noopener noreferrer nofollow">a report</a> from local news provider MoneyToday, the Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) recently convened a committee that decided against approving Hanbitco’s request to change its business status. Industry sources suggest that this decision was based on Hanbitco’s inability to meet the standards set by the Act on Reporting and Using Specified Financial Transaction Information, often referred to as the Financial Transaction Reporting Act.</p><h2 id="header-1">Fine and cautionary order</h2><p>A person familiar with the matter that the committee started deliberating on Hanbitco’s request to alter its business status about two weeks ago and ultimately decided against it. A significant factor in this decision might have been the KRW 2 billion ($1.49 million) fine levied on Hanbitco, stemming from numerous violations found in recent on-site inspections, the source added.</p><p>Before approaching the FIU with its request, Hanbitco formed a partnership with Kwangju Bank in June to obtain real-name accounts, facilitating Korean won deposits and withdrawals. Achieving this is quite uncommon for a crypto-only exchange. In Korea, exchanges are legally required to have real-name bank accounts for trading in Korean won. Presently, only five platforms hold registration as fiat-to-crypto exchanges: Upbit, Bithumb, Coinone, Korbit and Gopax, each having its own banking partnership.</p><p>As per the details released by the FIU, besides the levied fine, Hanbitco was issued a cautionary order, and five of its employees faced reprimands.</p><p>The fine of KRW 2 billion is the heaviest handed out to a virtual asset service provider from on-site inspections held between last year and the first half of this year. For perspective, Upbit, the country’s largest crypto exchange, was fined KRW 80 million.</p><p>An FIU representative noted that during the evaluation of Hanbitco’s application to transition into a fiat-to-crypto exchange, factors such as the firm’s anti-money laundering (AML) protocols, its internal control systems and past sanctions played a role in the decision-making process.</p>

South Korean FIU rejects Hanbitco’s bid to become fiat-to-crypto exchange

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