South Korean Court Requires VASP Registration for Stablecoin Exchange Services

A South Korean court has ruled that companies must register as Virtual Asset Service Providers (VASPs) to offer exchange services for stablecoins and other virtual assets. The decision was made in a lawsuit brought by Darwin KS, a blockchain fintech company, against the Financial Intelligence Unit's (FIU) request to suspend transactions with the firm.

The court backed the FIU's view that virtual-asset exchange services cannot operate without VASP registration, citing the Act on Reporting and Use of Certain Financial Transaction Information. Darwin KS had been operating an ATM service that exchanged Bitcoin, Ether, and Tether into cash in South Korean won, but was deemed to be conducting a virtual-asset business without proper registration.

The company collected fees during the exchange process, which the FIU argued constituted a virtual-asset business. Darwin KS plans to appeal the first-instance ruling.