South Korea FIU Slashes VASP Approvals: Only Two Made the Cut in 2025

Regulatory gatekeepers just slammed the door. South Korea's Financial Intelligence Unit (FIU) has turned its approval process for Virtual Asset Service Providers (VASPs) into a near-impenetrable fortress. The message is clear: play by our rules, or don't play at all.

The Great VASP Drought

Forget a steady stream of licensed exchanges. The FIU's 2025 tally tells the whole story—a mere two approvals. That's it. This isn't just tightening; it's a strategic chokehold designed to filter out all but the most robust, compliant contenders. The era of easy market entry is over.

Quality Over Quantity: The New Mantra

This drastic cut isn't about stifling innovation—at least, not officially. Regulators are pitching it as a necessary purge. The goal? To elevate industry standards, crush weak compliance frameworks, and protect investors from the next catastrophic collapse. They're building a moat, and only the best-prepared can cross the drawbridge.

Survival of the Fittest

For existing VASPs, this is a mixed blessing. Less competition from new entrants could solidify market share. But the heightened scrutiny won't stop at the gate; it's a permanent condition. For aspiring platforms, the path forward demands fortress-level compliance and deep pockets—the kind usually reserved for traditional finance players who still think blockchain is a fad.

The irony is thick enough to trade. In its quest to sanitize the crypto wild west, the FIU may have just created the most exclusive, high-barrier club in finance—proving that sometimes, the best way to mimic traditional finance is to adopt its most frustrating trait: keeping the little guy out.

TLDR

• South Korea’s FIU approved only two new virtual asset service providers in the year 2025.
• Happy Block received approval in January 2025 for exchange and trading services.
• Blosafe was approved in August 2025 for transfer and storage management operations.
• The average VASP approval time increased from 11 months in 2024 to 16 months in 2025.
• Blosafe’s application took over 600 days to receive approval from the FIU.

South Korea’s Financial Intelligence Unit (FIU) approved only two new VIRTUAL asset service providers (VASPs) in 2025, delaying market expansion, extending approval times from 11 months to 16 months, and increasing scrutiny as fewer applicants progressed through the regulatory process.

Happy Block and Blosafe Secured 2025 VASP Approvals

The FIU approved Happy Block in January 2025 for exchange and trading services, while Blosafe received approval in August for custody operations.

Both approvals reflect a tighter regulatory approach as only two licenses were granted in the entire year, down from four in 2024.

Blosafe’s approval took over 600 days, far exceeding the average processing time of 16 months in 2025.

Happy Block’s application period remained undisclosed, though the company’s operational scope includes trading and exchange services under the VASP framework.

The decline in approvals shows that FIU has tightened its evaluation process and raised entry barriers in the virtual asset market.

According to industry sources, several applicants remain stalled due to prolonged review periods and increased documentation demands.

Bit Korea and Major Exchanges Await Decisions

Bit Korea, a joint venture formed with Hana Bank in 2024, submitted its application but has not yet received FIU approval.

The company cannot launch services until it completes the full approval process, as required under current regulations.

South Korea requires both registration and approval before any virtual asset operator may begin operations legally.

Meanwhile, Dunamu, operator of Upbit, received its license renewal only on December 23, 2025, after missing the renewal deadline by over a year.

In November, the FIU fined Dunamu 35.2 billion won for violating anti-money laundering regulations.

Separately, Korbit applied for renewal in September 2025, and Bithumb, Coinone, and Gopax followed in October.

Korbit received a 2.73 billion won fine and an institutional warning on December 31, following the review of its operations.

The current regulatory backlog has delayed decisions for other exchanges, while pressure increases to meet compliance requirements.

South Korea Expands Travel Rule Scope

Between January and August 2025, VASPs filed 36,684 suspicious transaction reports with South Korea’s FIU.

This total already exceeds the combined reports from 2023 and 2024, which stood at 16,076 and 19,658 respectively.

Regulators continue to receive rising volumes of flagged activity tied to suspected illegal fund movements and compliance failures.

The Korea Customs Service reported 9.56 trillion won in crypto-linked crime cases between 2021 and August 2025.

About 90% of those cases involved hwanchigi operations, which use crypto for illegal foreign exchange and money laundering.

These schemes convert proceeds into cryptocurrency abroad, transfer them to domestic exchanges, and then convert to Korean won.

In November 2025, South Korea expanded Travel Rule coverage to apply to all transaction amounts without exemption thresholds.

On January 3, 2026, Hana Financial Group Chairman Ham Young-joo emphasized the need for stablecoin infrastructure development.

He stated, “Stablecoins should be considered a strategic priority,” underscoring the need for robust systems and oversight.