Binance Law? South Korean authorities strengthen regulatory efforts: Notification required for changes in foreign personnel

According to a report from News1, the South Korean financial regulatory agency is strengthening its monitoring of cryptocurrency companies, stating that existing companies must report changes including the company's location and the movement of foreign personnel within the company. Domestic cryptocurrency asset service providers have pointed out that this may be due to the international exchange Binance's previous entry into the Korean market through the acquisition of Gopax.

Foreign Personnel Position Changes Must Be Reported

News1 has learned from industry insiders that South Korean regulators have recently issued a notice to cryptocurrency companies regarding reporting of foreign executives.

According to the information, any appointments or changes in positions of foreign personnel within companies must be reported to and reviewed by the authorities.

A representative from a Virtual Asset Service Provider (VASP) stated:

Previously, reporting was only required for changes in addresses or senior management, but now even adjustments to foreign executives must be reported to the regulatory authorities, indicating a heightened focus on foreign personnel.

Report: Related to Binance's Entry into South Korea

Industry insiders speculate that this move may be related to Binance's acquisition of Gopax, one of the five major exchanges in South Korea, earlier this year as part of its entry into the Korean market.

Prior to this, Gopax faced a crisis due to the FTX incident and received financial assistance from Binance, which later led to its acquisition.

Subsequently, Binance appointed Leon Foong, the former head of the Asia-Pacific region, as the new CEO of Gopax. However, the regulatory authorities have not processed the application for the change in position submitted by him for over four months.

Eventually, Gopax seemed to take note of the authorities' sensitivity to foreign individuals and appointed Lee Jung-hoon as CEO in June of last year. Leon Foong recently resigned from his position at Binance.

In contrast, another cryptocurrency exchange, Crypto.com, entered the South Korean market in August of last year, and the appointments of its CFO and CEO have been approved.

Prior to this, Crypto.com had obtained local operating licenses and registrations through the acquisition of the Korean electronic payment company PnLink and the virtual asset service provider OKBIT, leading the way for its entry into the Korean market ahead of Binance.

Increased Difficulty for Overseas Exchanges to Enter the South Korean Market

Centralized exchanges (CEX) have always been popular among local users in South Korea compared to decentralized exchanges (DEX). This includes Haru Invest, which temporarily suspended deposits and withdrawals in June of this year due to partner issues, serving over 80,000 members and managing over $1 billion in cryptocurrency assets.

Additionally, the enthusiasm of the 7 million cryptocurrency users in South Korea for investing in digital assets can be seen through the recent volatile movements of the $CYBER token.

It is evident that global cryptocurrency companies have shown strong interest in entering the South Korean market. They often prefer to enter by acquiring existing Korean cryptocurrency service providers to avoid the cumbersome compliance process of the Information Security Management System (ISMS).

However, if South Korea further raises the entry barriers for foreign companies through this move, international exchanges may make more cautious assessments of entering the Korean market.