South Korea’s financial authorities are signaling that a decision on Bithumb’s license renewal is unlikely to come quickly, after a recent mistaken Bitcoin payout complicated an already sensitive review.
According to regulators and industry officials on Wednesday, Bithumb applied in October 2024 to renew its registration as a virtual-asset service provider. The Financial Intelligence Unit, or FIU, is now in the middle of the examination.
Under the country’s Act on Reporting and Using Specified Financial Transaction Information, crypto operators must renew their registration every three years. While the FIU holds the final authority, it can delegate parts of the review process to the Financial Supervisory Service.
The unexpected payout incident, which occurred while the renewal screening was under way, has deepened the authorities’ dilemma. With an on-site inspection of Bithumb continuing, the FIU says it is difficult to determine whether the renewal can be approved before the findings are finalized.
At the same time, officials acknowledge that it is legally challenging to deny the application based on the current framework. The law specifies narrow grounds for rejection, such as failure to obtain information-security certification, the absence of real-name bank accounts, or criminal convictions under anti–money laundering or terrorism-financing statutes within the past five years.
A senior Financial Services Commission official said the review “doesn’t appear likely to wrap up anytime soon.”
Another regulatory official said the inspection tied to the latest incident is focused primarily on potential violations of the Virtual Asset User Protection Act, rather than the reporting law that governs registration renewals. If authorities refuse to grant approval without meeting the explicit rejection criteria, that itself could constitute a legal breach, the person said.
The result is an awkward gap. An event that could undermine trust in the broader crypto market has erupted, yet regulators lack a clear legal basis to directly reflect it in the renewal decision.
The situation traces back to earlier government policy, when virtual currencies were not treated as formal financial assets and the regulatory regime was built largely around anti–money laundering concerns.
Officials say this is one reason the government is now pushing to enact a more comprehensive Digital Asset Basic Act that would give authorities wider supervisory powers.
The Financial Supervisory Service, which will provide its internal opinion to the FIU, is also expected to tread carefully.
Speaking at an emergency parliamentary session on the Bithumb incident, FSS Governor Lee Chan-jin said the ultimate call rests with the FIU but added that regulators would make a prudent judgment “taking the current circumstances into account.”
Industry participants say that while it may be hard for authorities to formally reject Bithumb’s renewal, they could effectively put the process on ice until the exchange presents convincing steps to restore market confidence.
Even if the review drags on, Bithumb can continue operating. Under existing rules, if a license expires during the examination, the validity is extended until the authorities notify the company of their decision. Bithumb’s previous authorization lapsed in December 2024.
For regulators, however, the longer the process stretches, the more it underscores the limits of the current law—and the difficulty of resolving a high-profile case that few expect to end swiftly.
