BitGo has become the first foreign cryptocurrency firm to register a Korean subsidiary directly as a Virtual Asset Service Provider, after the Financial Intelligence Unit accepted BitGo Korea’s VASP registration. The move allows BitGo to build its own regulated infrastructure rather than purchasing an existing licensed operator, expanding institutional custody competition in South Korea. Separately, a compliance dispute between HTX and Kraken over frozen customer funds totaling roughly $4.2 million has highlighted the growing friction between regulatory protection and user trust. Meanwhile, South Korea has tightened rules on offshore crypto transfers, requiring sender and recipient information for all domestic VASP transfers and imposing further verification for offshore exchanges and self-hosted wallets.
BitGo secured a regulated foothold in South Korea after the Financial Intelligence Unit accepted BitGo Korea’s Virtual Asset Service Provider registration. The approval marks the first time a Korean-based subsidiary of a foreign cryptocurrency firm has been registered as such directly.
Rather than purchasing an existing licensed operator, BitGo was able to register with the FIU, thereby creating its own regulated infrastructure. Chen Fang, BitGo Korea CEO and BitGo Chief Revenue Officer, said the approach reflects a “long-term commitment” to Korea’s regulatory framework.
Supporting the move, Abel Seow, Managing Director and Head of APAC Sales at BitGo, stated that there is growing interest in security alongside local regulatory alignment. The approval expands institutional custody competition while showing foreign crypto firms can enter South Korea directly by meeting domestic requirements.
As BitGo builds regulated infrastructure for institutions, another exchange dispute shows how those same compliance systems can affect ordinary fund transfers. HTX, which has been under scrutiny over address poisoning, said its internal review found no official accounts involved in address-poisoning transfers reported by users.
Several cases emerged after Kraken froze customer funds, with affected balances reaching roughly $4.2 million. HTX has spent more than two months to resolve the restrictions placed upon the accounts, raising questions about how exchanges distinguish between suspicious transactions and legitimate transfers.
Stronger compliance can protect platforms from illicit flows, yet overly broad controls can also restrict innocent users. Therefore, exchanges must develop methods to reconcile this conflict, as extended account freezes may ultimately lead exchanges to trade off user trust for regulatory protection.
The HTX-Kraken controversy has illustrated why South Korea is enhancing controls on the flow of funds offshore from domestically regulated entities. Under the updated framework, domestic VASP transfers now require sender and recipient information regardless of transaction size.
Offshore exchanges and self-hosted wallets are subject to further verification requirements for user identities, with most transfers requiring same-person ownership. Transfers worth approximately $7,500 or more also trigger mandatory internal monitoring when sent to these destinations.
This creates a clearer divide between domestic and offshore access. Registered firms such as BitGo Korea can operate within the local framework, while unregistered counterparties face greater scrutiny. As implementation advances, transfer delays and rejection rates will reveal how strongly these rules reshape offshore crypto access.
