Controversy Over Whether Foreigners' Stablecoin Exchange Service Requires Reporting

A company, A, that provides a service to exchange stablecoins for Korean won for foreigners lost its first trial in an administrative lawsuit against the head of the Korea Financial Intelligence Unit (KOFIU). The head of KOFIU classified A as an unreported virtual asset business and demanded that existing virtual asset businesses refrain from dealing with A in accordance with Article 15 of the Specific Financial Transactions Information Act. A filed a lawsuit seeking the cancellation of this disposition, but the court ruled that the service in question is a virtual asset business that requires reporting and dismissed the plaintiff's claims. The court determined that the service of exchanging stablecoins for Korean won does not constitute an 'exchange act' as defined in Article 2, Item 2 of the Act on the Protection of Users of Virtual Assets, as it does not involve the exchange of digital assets. A has expressed its opposition to the court's ruling and plans to appeal, with attention now turning to the higher court's judgment. In a situation where the definition and interpretation of domestic virtual asset businesses have not been clearly established, A argues that it is separate from unreported virtual asset businesses despite having received patents and regulatory sandbox approvals. This highlights the need for risk management for businesses attempting to enter new technology fields, as unreported virtual asset businesses may face criminal penalties.

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