Binance Expands Media Outreach in South Korea Amid Controversy Over Unregistered Operations

Global cryptocurrency exchange Binance is expanding its promotional activities targeting South Korean media, raising concerns about the scope of unregistered foreign cryptocurrency operators in the country. While it has not directly attracted customers or provided trading services, critics argue that its indirect marketing appears aimed at domestic investors.

According to the financial investment industry on September 17, Binance has been holding press conferences in South Korea this year and has been distributing materials showcasing its services and technology. Previously focused on stabilizing its management as the largest shareholder of local exchange Gopax, Binance is now increasing efforts to promote its own brand and services.

The key issue is whether these activities can be classified as domestic operations under the Act on Reporting and Use of Specific Financial Transaction Information. Current law requires that any entity engaging in cryptocurrency business in South Korea must register with the Financial Intelligence Unit (FIU). Foreign operators are also subject to the same registration obligations if they target domestic customers.

The FIU has determined the domestic operations of foreign businesses based on criteria such as operating a Korean-language website, conducting events for Koreans, and supporting transactions in Korean won. If unregistered operations are confirmed, the FIU notifies law enforcement and takes measures to block access to domestic websites and applications.

As of now, Binance has not registered as a cryptocurrency operator in South Korea. However, it is difficult to definitively conclude that merely holding press conferences and distributing press releases constitutes domestic business activities under the law. A comprehensive assessment is needed to determine whether it has encouraged service sign-ups or trading, and whether its promotional content specifically targets domestic investors.

Within the South Korean cryptocurrency industry, there are concerns that Binance's recent actions blur the line between direct sales and corporate promotion. Even if it is not engaging in direct customer sales, continuous exposure of its services and products through local media could ultimately attract domestic users.

The financial authorities have yet to make a determination. They plan to review whether Binance's activities fall under domestic operations as defined by the law.

Local exchanges are raising issues of regulatory fairness. Domestic operators invest resources and costs to maintain their status as cryptocurrency operators, including obtaining Information Security Management System (ISMS) certification, establishing anti-money laundering systems, verifying customers, and complying with travel rule requirements. They also face restrictions on transferring cryptocurrencies with unregistered foreign operators and must verify trading partners.

A representative from a domestic exchange stated, “While domestic operators bear legal obligations and related costs, foreign operators can enhance brand recognition without registration. Clear criteria are needed to determine what constitutes corporate promotion and at what point it is considered targeting domestic customers.” In response, a Binance representative argued, “This should be viewed not as marketing or service promotion, but as efforts to inform users about protection and technology.”

Domestic exchanges primarily offer spot trading, while foreign exchanges, including Binance, operate a variety of products such as derivatives. With the implementation of cryptocurrency taxation next year, there are predictions that domestic investors may increasingly turn to foreign exchanges.

Another industry representative noted, “While it is not appropriate to automatically classify the promotional activities of unregistered foreign operators as illegal, the potential for attracting domestic users should be examined. The financial authorities need to establish criteria that distinguish the activities of major shareholders from the domestic operations of foreign exchanges.”