South Korean financial authorities are planning sanctions against crypto exchanges who are operating illegally in the country, business newspaper Hankyung reported on Friday.

The Financial Intelligence Unit (FIU) classified a number of exchanges who are not registered as Virtual Asset Service Providers (VASPs) as targets for sanctions, according to the report.

The exchanges targeted – BitMEX, KuCoin, CoinW, Bitunix and KCEX – have been found to be operating Korean-language websites without reporting to FIU. For that reason, they are classed as illegal businesses, as per the country’s regulations.

“We are currently reviewing blocking access to unreported overseas exchanges that are providing services to domestic investors through consultation with the Korea Communications Standards Commission,” an FIU official said, accordinh to the report.

“We are organizing damage cases and related data to strengthen communication between authorities, and we expect to see tangible measures taken within this year.”

BitMEX, KuCoin and CoinW did not respond to CoinDesk’s request for comment.

Last month, South Korean crypto exchange Upbit was prohibited from allowing new customers to transfer assets to its platform for three months due to non-compliance with its obligations as a regulated provider.

Read More: Crypto Exchange Bithumb Raided by South Korean Prosecutors Over Embezzlement Allegations: Report

The U.S. Securities and Exchange Commission is looking to reset its relationship with the crypto industry, even before a permanent chair is confirmed by Congress. The latest effort was Friday’s roundtable, hosted at the SEC’s headquarters in Washington, D.C. and featuring a dozen attorneys representing different views and positions within the crypto industry.

You’re reading State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. Click here to sign up for future editions.

The narrative

The SEC’s reset began when Acting Chair Mark Uyeda launched a crypto task force and oversaw his agency withdraw Staff Accounting Bulletin 121, drop a number of ongoing lawsuits, pause a few more and publish multiple staff statements about how the agency might look at memecoins and proof-of-work mining.

Why it matters

The SEC is arguably the most important federal regulator in crypto at the moment. While its sister agency, the Commodity Futures Trading Commission, may be the regulator that might one day oversee crypto spot markets, right now it’s the SEC that most companies in the sector look to for guidance on what, exactly, it is they can do.

Breaking it down

The roundtable was split into two portions (three, if you count introductory remarks from the three commissioners): A roughly 90-minute moderated panel discussion, led by former SEC Commissioner and Paredes Strategies founder Troy Paredes, and a 90-minute town hall still moderated by Paredes but featuring questions from the general public.

You can read CoinDesk’s coverage of the panel discussion at this link.

Though the central question during the discussion was — as it has been for years — when and how exactly is a crypto or crypto transaction a security, panelists touched on everything from the role of crypto in boosting ransomware to how exactly companies should operate.

Chris Brummer, the CEO of Bluprynt and professor at Georgetown Law, opened up the discussion with his analysis of what the Howey Test actually means: We’re basically saying when you have savings, there’s an issue of investor protection. The common enterprise prong that we’re all familiar with is really addressing a kind of providing problem.”

“It really just goes to information asymmetries, and then the question of profits goes to investor psychology, greed and fear, the kinds of things that can distort decision-making,” he said. “And basically, when you have all those factors together, you have a mandated disclosure [rule].”

The SEC’s approach thus far has limited a number of crypto projects, Delphi Ventures General Counsel Sarah Brennan said. While many crypto projects are intended to have a broad initial distribution, “the specter of the applications of securities laws” means many projects act more like they’ll go public than actually embrace the crypto aspects of their projects.

“We see more and more the token is the product … there’s different ways that people are artificially supporting price and it’s generally been, I’d say, sort of toxic to the market,” she said.

John Reed Stark, a former SEC attorney, said that the “economic reality of the transaction” is critical.

“However you want to look at it, the people buying crypto are not collectors,” he said. “We all know that they’re investors, and the mission of the SEC is to protect investors.”

It remains to be seen how the SEC’s efforts will continue, but the agency is taking a more active role in publicly engaging with these questions and the industry seems to be responding. The SEC auditorium was about three-quarters full at times, to say nothing of anyone who tuned into the livestream.

• As Congress Talks Up Its Earth-Shaking Crypto Bill, Regulators Are Already at Work: Federal agencies aren’t waiting for Congress or even their permanent heads to get busy with crypto policymaking, Jesse Hamilton noted in this prescient analysis which came ahead of the SEC’s PoW mining statement and OCC’s reputational risk update.
• Proof-of-Work Crypto Mining Doesn’t Trigger Securities Laws, SEC Says: Pooled and solo proof-of-work mining is outside the SEC’s jurisdiction, the agency said in a staff statement.
• U.S. Bank Agency Cuts ‘Reputational Risk’ From Exams After Crypto Sector Cites Issues: The Office of the Comptroller of the Currency removed “reputational risk” from its supervision handbook, it told national banks on Thursday.
• XRP Zooms 10% as Garlinghouse Says SEC Is Dropping Case Against Ripple: Ripple CEO Brad Garlinghouse said the SEC agreed to drop its appeal of a July 2023 ruling that said Ripple did not violate federal securities laws in selling XRP to retail investors by making it available through exchanges, and that the case itself is close to an end.
• Digital Chamber Gets New Chief as Crypto Lobbyists Embrace Friendlier Washington: Digital Chamber founder and CEO Perianne Boring is stepping down next month and becoming the chair of its board. The lobby organization’s president, Cody Carbone, will take over as CEO.
• Crypto Exchange Bithumb Raided by South Korean Prosecutors Over Embezzlement Allegations: Report: South Korean prosecutors have launched an investigation into crypto exchange Bithumb, looking into embezzlement allegations.
• Inside Pump.fun’s Plan to Dominate Solana DeFi Trading: Pump.fun is launching a token swap service in an effort to get a slice of the fees generated by automated market makers on Solana.
• Gotbit Founder Aleksei Andriunin Pleads Guilty to Wire Fraud, Market Manipulation: Aleksei Andriunin, the Russian national who told CoinDesk in 2019 that he ran a wash trading service to make cryptocurrencies appear to have a greater liquidity and market capitalization than they actually do, pleaded guilty to market manipulation and wire fraud charges in a plea deal.
• Nasdaq Shift to Round-The-Clock Stock Trading Partly Due to Crypto, Says Exchange Executive: Nasdaq and the New York Stock Exchange are both working toward round-the-clock trading at least in part due to crypto trading already being round-the-clock, Nasdaq’s head of U.S. Equities and Exchange-traded Products Giang Bui said.
• SEC Chair Nominee Paul Atkins to Face Senate Panel Next Week: SEC Chair nominee Paul Atkins and Comptroller nominee Jonathan Gould will face the Senate Banking Committee for their confirmation hearing next week.
• U.S. Government Removes Tornado Cash Sanctions: A few months after the Fifth Circuit Court of Appeals ruled that the Treasury Department’s Office of Foreign Asset Control couldn’t sanction smart contracts, OFAC removed its sanctions against crypto mixer Tornado Cash.

Tuesday

• 15:30 UTC (11:30 a.m. ET) The federal judge overseeing the U.S. Department of Justice’s case against Samourai Wallet’s founders held a status conference hearing in the case. Per my colleague Cheyenne Ligon, who attended, the 7-minute long hearing addressed a few procedural matters but did not delve into the substance of the case.

Thursday

Friday

• 17:00 UTC (1:00 p.m. ET) The U.S. Securities and Exchange Commission held a roundtable event with legal experts from the crypto industry and SEC staff.

• (Reuters) Another strain of bird flu — this time H7N9 — has hit the U.S. for the first time since 2017. This is on top of the ongoing H5N1 epidemic.
• (CNN) Amtrak CEO Stephen Gardner said he would be stepping down from leading the quasi-public transit company at the White House’s direction.
• (Bloomberg) Coinbase is in advanced talks to acquire derivatives platform Deribit, Bloomberg reported, following CoinDesk’s reporting last month that the exchange was interested in the firm.
• (Wired) A former Meta employee wrote a tell-all book about her experiences at the company and Meta is going all out to limit its distribution. Careless People has since risen to become a best-seller on Amazon.
• (Bloomberg) Bloomberg profiled New York Democrat Kirsten Gillibrand’s role in pushing for crypto legislation in the Senate.
• (Politico) The Trump administration’s plans for USAID include reforming it and “leverag[ing] blockchain technology to secure transactions,” though this document Politico obtained does not include a lot more detail. “All distributions would also be secured and traced via blockchain technology to radically increase security, transparency and traceability,” the document says. If you’re one of the individuals pushing for blockchain integration with the U.S. government, let’s chat.
• (The Guardian) The Trump administration renditioned more than 200 men of Venezuelan origin to an El Salvadorian prison, potentially in violation of a court order and without holding any hearings or trials. While the administration said in public statements that all 238 men had ties to the Tren de Aragua gang which in turn was taking direction from Venezuela’s government, officials said in court documents that many of the people flown to El Salvador did not have criminal records. Family members of many of these individuals say they were not criminals and did not have gang ties. Some of the individuals reportedly signed deportation papers and expected to be flown back to Venezuela. U.S. intelligence agencies seemingly also found that TdA was not tied to the Venezuelan government, the Times reported.

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Bluesky @nikhileshde.bsky.social.

You can also join the group conversation on Telegram.

See ya’ll next week!

WASHINGTON, D.C. — The staff at the U.S. Securities and Exchange Commission has embraced the chance to finally work with the crypto industry to hash out policy for overseeing digital assets transactions, said Commissioner Hester Peirce, the head of the agency’s crypto task force.

The securities regulator is ready “to seek earnestly to find a workable framework,” Peirce said at the agency’s first crypto-focused roundtable on Friday. “I think we’re ready for the spring ahead,” she said, referring to the title of the day’s event, the “Spring Sprint Toward Crypto Clarity.”

The task, according to Peirce: “Can we translate the characteristics of a security into a simple taxonomy that will cover the many different types of crypto assets that exist today and may exist in the future?”

Mark Uyeda, the agency’s acting chairman, told reporters that despite recent SEC policy statements that certain areas of the crypto sector aren’t subject to securities laws — memecoins and mining, so far — it’s a “definitely possibility” that others will be defined as securities.

“We’re moving on multiple tracks here,” he said in answer to a question from CoinDesk. Each statement issued so far “ultimately is a staff statement” that doesn’t have legal backing, but he said the roundtable represents the entire commission — currently three members — looking at what a “potential commission interpretation might look like.”

In his opening remarks at the event, Uyeda, who was appointed by President Donald Trump as the SEC awaits a Senate confirmation of Paul Atkins, argued that the agency should have been more willing in recent years to make such interpretations public.

“When judicial opinions have created uncertainty from our participants in the past, the commission and its staff have stepped in to provide guidance,” Uyeda said. “This approach of using common rulemaking for explaining the commission’s process or releases rather than enforcement actions, should have been considered for classifying crypto assets under the federal security laws.”

Panel discussion

The panel discussion saw a dozen securities attorneys in the crypto sector weigh in on the specific issues they saw as they advised companies.

“What’s the biggest question that you face in trying to wrestle with this question?,” moderator Troy Paredes, a former SEC commissioner who now runs consulting firm Paredes Strategies, asked Sarah Brennan, the general counsel at Delphi Ventures and one of the 11 panelists.

“The specter of the application of securities laws has moved early-stage projects in the market to sort of take an arc very similar to [initial public offerings], where they stay private longer,” she replied.

“These assets in the traditional model are designed to have wide, broad early distribution and most of the market is hedging that on the application of securities laws, so it ends up looking a lot like your traditional markets where people will marshal their way to an exchange listing without that broad dissemination or price support or actually fully launching the technology.”

The panel featured critics of the industry alongside attorneys who have worked to develop the sector.

“Whether you’re talking yield farms or ostrich farms or orange groves, the whole point of securities regulation was to wrap that all up into a very big, broad, principles-based regulation,” former SEC attorney John Reed Stark said. His concern is that, even in 2025, much of the market lacks utility.

“If it all went away tomorrow and you weren’t speculating in it, you wouldn’t care,” he said.

Legislator questions

Ahead of the roundtable, Sen. Elizabeth Warren and Rep. Jake Auchincloss, both Massachusetts Democrats, wrote an open letter to Uyeda asking about the SEC’s staff statement on memecoins and how it was developed.

The letter asked whether anyone at the SEC communicated with the White House about the statement, whether the White House’s crypto working group had directed the SEC to do anything and why the staff statement was not built into formal rulemaking.

Warren and Auchincloss also asked the SEC to explain how it would specifically define memecoins as distinct from “general cryptocurrency,” how it would distinguish between actual memecoins and memecoins that don’t meet the staff statement, and which memecoins the SEC analyzed in drafting its staff statement.

NFTs next?

Peirce told reporters on the event’s sidelines that a next possibility for another agency crypto policy statement (following recent statements for memecoins and mining) could be non-fungible tokens. She said NFTs could probably benefit from clarity on the agency’s thinking.

“I think we’ll see that we could do it on NFTs, as well,” she told reporters on the sidelines of the agency’s crypto roundtable on Friday. “We could have done that a long time ago.”

When asked by CoinDesk whether non-binding, unofficial staff statements are the way to approach policy signals from the agency, she said this is a response to recent years in which the agency was reticent to talk about any of it.

“There is certainly a role for notice-and-comment rulemaking. but I think not when you’re just saying, ‘This is how we’re looking at the law,'” she said. “You don’t need that.”

She also addressed reports that federal budget slashing will lead to a cut of SEC staff of hundreds of people.

“It’s always sad to me when you lose someone with a lot of experience, but people do come and go from the SEC,” she said. “They do retire, and so we have to have a deep bench.”

UPDATE (March 21, 2025, 20:12 UTC): Adds comments from Hester Peirce.