Seoul court says stablecoin exchange services need VASP registration in South Korea

First ruling on stablecoin exchange services

The decision came from the Sixth Division of the Seoul Administrative Court, which dismissed a lawsuit filed by blockchain fintech company Darwin KS. The company had asked the court to cancel the FIU’s request that transaction counterparties suspend dealings with the firm.

According to the source report, the case is the first court ruling on the legality of stablecoin exchange services in South Korea. By rejecting Darwin KS’s claim, the court accepted the FIU’s position that virtual-asset exchange activity falls within the scope of regulated VASP business.

How Darwin KS operated

Darwin KS had been running ATM-based exchange services for foreign tourists. Through those machines, users could exchange Bitcoin, Ether and Tether into South Korean won. The company earned fees during the exchange process.

A central point in the dispute was custody. Darwin KS said it did not directly hold customer assets. Instead, customers’ virtual assets were stored with Korea Digital Asset, or KODA, a custody company already registered with the FIU. Darwin KS argued that its role was limited to providing a technical brokerage and settlement system rather than operating as a virtual asset service provider itself.

FIU enforcement action

The company had continued the business under a regulatory sandbox approval beginning in 2020. But in September 2025, the FIU concluded that Darwin KS was conducting a virtual-asset exchange business without the required VASP registration.

After reaching that conclusion, the FIU asked existing providers to halt transactions with Darwin KS. The regulator’s argument was that the company’s fee-based role in the exchange process amounted to virtual-asset business activity, regardless of the custody arrangement.

Court sides with regulator

The court ultimately backed that interpretation. In effect, the ruling found that providing exchange services for cryptocurrencies, including stablecoins such as Tether, requires VASP registration in South Korea even if customer assets are held by a separate registered custodian.

Darwin KS has said it plans to appeal the decision, meaning the legal dispute is not yet over. Still, the judgment gives the FIU judicial support for its view that firms cannot avoid VASP obligations by structuring their operations around third-party custody while collecting fees tied to virtual-asset exchanges.

The case adds an early judicial precedent to South Korea’s approach to crypto oversight, particularly around stablecoin-related services, while leaving the next stage of the dispute to the appeals process.