Korea Study Calls for DeFi and OTC Providers to be Labeled Unauthorized Digital-Asset Operators

A recent research report from the Korea Institute of Finance has recommended that decentralized finance (DeFi) and over-the-counter (OTC) trading providers be classified as unauthorized digital-asset operators in South Korea.

The report, titled 'Second-Phase Legislation and Anti-Money Laundering System Improvements Related to Stablecoins,' was commissioned by the Financial Services Commission and submitted to the regulator on October 2.

The institute suggested that regulators should broadly interpret digital-asset business activities subject to anti-money laundering (AML) and counter-terrorist financing (CFT) rules, rather than explicitly designating DeFi and OTC support providers as direct targets.

Most DeFi and OTC support providers operate in areas where regulatory jurisdiction is unclear, making it difficult for any single country to exercise supervisory authority, according to the report.

The Korea Institute of Finance also proposed setting standards for determining whether offshore operators are operating without registration, to protect domestic users and businesses.