Binance’s Entry Into South Korea Under Scrutiny by Regulators

• Binance had acquired a controlling stake in the local exchange GOPAX.
• Regulators are weighing whether to maintain or sever connections between the two parties.

The arrival of Binance, a major cryptocurrency exchange, into the South Korean market has caused concern among the country’s financial regulators. Binance, the biggest cryptocurrency exchange in the world, returned to South Korea on February 3. After a two-year absence by acquiring a controlling stake in the fifth-largest cryptocurrency exchange in the country, GOPAX.

Local media Chosun Ilbo stated on February 23 that Binance’s debut in South Korea might lead to a rise in financial crimes in the nation. South Korean financial authorities are concerned that the lack of transparency around Binance’s administration, governance structure, business approach, and accounts could lead to a rise in financial crimes such as money laundering, illicit foreign currency operations, and fraud.

Global Scrutiny by Regulators

Binance may have to reapply for a virtual asset service provider (VASP) license in South Korea. Since the country’s authority is contemplating regulating the exchange. The exchange GOPAX, now owned by Binance, will be re-approved as a virtual asset operator (VASP). With Binance’s purchase of GOPAX, regulators are weighing whether to maintain or sever connections between the two parties.

As one high-ranking member of the financial authority put it:

“If Binance conducts exchange business in South Korea, it will be difficult to properly supervise it. There is a possibility of outflow of national wealth through the distribution of several unverified overseas listed coins.”

With FTX’s demise, more eyes are on Binance. Paxos was forced to halt production of the Binance USD (BUSD) stablecoin on February 13 after the US Securities and Exchange Commission (SEC) and the New York Department of Financial Services classified it as a security.

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