South Korea’s biggest crypto exchanges are taking their fight to the rulebook.
The Digital Asset eXchange Alliance (DAXA) — representing 27 registered virtual asset service providers, including the country’s five largest exchanges (Upbit, Bithumb, Coinone, Korbit and Gopax) — has formally opposed proposed changes to the nation’s anti-money laundering (AML) framework. The group submitted comments arguing the amendments would create an unworkable compliance burden and exceed what the law requires.
What’s being proposed
- Regulators want a blanket rule requiring exchanges to report every overseas crypto transfer of 10 million won (about $6,800) or more as a “suspicious transaction,” even when there are no signs of illicit activity.
- The Financial Services Commission and the Financial Intelligence Unit jointly published the amendments on March 30. A public comment window runs through May 11, with final rules expected after regulatory and legal review in July.
Why the industry objects
- DAXA says the numbers don’t add up. South Korea’s five major platforms filed roughly 63,000 suspicious transaction reports last year. Under the new threshold, the alliance estimates that figure would balloon to more than 5.4 million reports annually — an 85-fold increase.
- The group warns that such a surge would overwhelm exchanges’ compliance teams and make meaningful monitoring and investigation nearly impossible.
- DAXA also challenges a separate draft requirement to “verify the accuracy” of customer data, arguing it goes beyond what current law mandates.
Legal pushback already underway
The comment letter is only one front in a broader industry pushback. Several exchanges have been fighting AML-related sanctions in court and securing temporary relief:
- Dunamu, Upbit’s parent company, won a first-instance ruling on April 9 that cancelled a three-month partial business suspension tied to alleged customer due diligence failures and transactions with unregistered foreign platforms. Regulators appealed on April 30, Yonhap reports.
- Bithumb obtained a court injunction pausing enforcement of a six-month partial suspension while the main case proceeds.
- Coinone is contesting a three-month partial suspension and a 5.2 billion won fine; enforcement has been temporarily halted after the exchange filed a legal challenge.
Why it matters
South Korea is one of Asia’s most active crypto markets, and the outcome of the rulemaking and the court cases could set the tone for how exchanges handle cross-border transfers, customer verification and AML compliance more broadly. Regulators say tighter controls are necessary to curb illicit flows; the industry says overly broad rules will generate massive volumes of mostly false positives and cripple effective surveillance.
The dispute highlights a familiar pattern: regulators intensifying AML enforcement while exchanges resist by litigating, lobbying through trade groups, and engaging the public comment process. The final July rules — and the court outcomes that follow — will be closely watched by crypto firms and compliance teams across the region.
Featured image: Nathan Benn/Getty Images. Chart: TradingView.
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